Banks will have 18 months to meet the increased limit.
But there are "pockets of risk that warrant vigilance" it said, in the Bank's half-yearly Financial Stability Report,.
"Lenders may be placing undue weight on the recent performance of loans in benign conditions".
The bank also warned that financial markets may be overvaluing some corporate bonds and United Kingdom corporate real estate assets by failing to fully account for the low and uncertain growth expectations that are driving current low interest rates.
The FPC highlighted rapidly growing consumer borrowing via credit cards, personal loans and, notably, vehicle finance.
The Bank of England is anxious that billions of pounds worth of deals are being offered for many consumers have built up deceptively respectable credit scores in recent years, thanks to the low interest-rate environment.
The central bank said it was raising the CCyB to 0.5 percent from its current level of zero - with a one-year implementation phase - and that it expected to raise it further to 1.0 percent in November.
It was cut to zero in the wake of last June's Brexit vote in order to encourage lending to continue to flow and to help support the wider economy.
To tackle the risks from consumer credit, the BoE is bringing forward its analysis of how banks would cope with massive losses in the sector that normally would be a part of lenders' annual stress tests at the end of the year.More news: Chinese Mobile Manufacturer Vivo retains IPL title sponsorship for next five years
The FPC also raised the minimum leverage ratio for British banks to 3.25 percent from 3.0 percent, to reflect last year's exclusion of central bank reserves from the calculation of capital.
In its twice-yearly Financial Stability Report, the Bank of England said the threats to the United Kingdom economy were not particularly significant.
It will also tighten up affordability tests for mortgage lending, ensuring borrowers can meet repayments in the event that interest rates increase to around seven per cent, or standard variable rates plus three per cent.
While consumer credit is a much greater concern than mortgage borrowing, the Bank has also enforced rules created to control the mortgage market.
On Brexit, the report says the Bank is looking at "the full range of possible outcomes", including no deal being done.
The FPC said it was "focused on scenarios that, even if they may be the least likely to occur, could have the most impact on United Kingdom financial stability".
"Such scenarios are where contingency planning and preparation will be most valuable", the Bank added.
The BoE said that some global risks it had previously identified had not crystallised.