What Determines Credit Limit?

How is credit limit determined?

Credit History

Most companies check your credit reports and gross annual income level to determine your credit limit.

Factors that issuers like to consider include your repayment history, the length of your credit history and the number of credit accounts on your report.

The company funds your limit accordingly.

What is a normal credit limit?

According to Experian data, the average credit card limit as of December 2016 was $8,071. That’s relatively unchanged from December 2015, when the average credit card limit was $8,042. As you’ll see below, there is a wide range in credit card limits because consumers with low credit scores can’t access high limits.

What should your credit card limit be?

But, experts recommend keeping your debt-to-limit ratio under 30%, or even under 10% if possible. That means if your limit is $5,000, then you should aim to charge less than $500 a month. The lower your debt-to-limit ratio, the better your credit score will be.

Is credit limit based on income?

Your Income

The amount of money you make generally affects the amount you can afford to pay. While you have a better chance of getting approved for a higher credit limit if you have a high income, there’s no guarantee your income will get you a high credit limit.