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What is a Credit Card Limit?

Last Updated: December 3, 2024

5 min read

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Key points about: credit card limits

Your credit card company determines your credit limit, which is the maximum amount you can spend on your credit card.
A higher credit limit may help keep your credit utilization ratio low, which can positively impact your credit score.
Several factors affect your credit limit, including your credit report and your personal income-to-debt ratio.

What’s a credit limit?

Your credit card limit is the maximum amount of money you can charge to your credit card. Once you learn how credit limits are determined, you can increase your chances of qualifying for a higher credit limit.

How is a credit card limit determined?

Credit card companies set credit card limits by estimating how much debt you can manage and reliably repay. Your credit score plays an important role in determining your credit card limit. A high score alone, however, doesn't necessarily guarantee a high credit limit.

To determine your credit limit, credit card issuers typically look at your credit history, your income, and how much you pay for your rent or mortgage. Pre-qualification could give you an idea of your credit limit without a hard credit check.

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What’s the best way to get a high credit card limit?

Each issuer has its own criteria for determining credit card limits and may weigh individual components of your credit profile uniquely. The best way to get a high credit limit is to make sure all the components that affect your credit score are in good standing.

Factors that help determine your credit card limit

Your credit history and other aspects of your financial life determine your credit limit.

Credit report

When credit card companies report your activity to the major credit bureaus, they use it to build your credit reports. The following categories from your credit report determine your credit score:

Payment history: Your payment history plays a big role in your overall creditworthiness. The idea is, if a cardholder has paid their bills on time in the past, they’re more likely to do so in the future. Ensuring you always make your credit card payments on time is one of the best long-term paths to a higher credit limit.

Credit utilization: Credit utilization refers to the amount of a person’s credit in use compared to their total credit available. Lenders generally prefer a lower credit utilization ratio—which means using a smaller percentage of your available credit.

Credit card issuers may look at both overall credit utilization and utilization on individual lines of credit when determining a credit card limit on a new account. If you plan on applying for a new card in a few months, paying down some existing balances could help raise your credit limit.

Length of credit history: Having a longer credit history gives issuers a larger pool of data to predict how you’re going to use credit moving forward. A long history of responsible credit use generally helps improve your odds of a higher credit limit.

Recent inquiries: Credit card issuers may view a person who has applied for several credit cards or loans in a short period of time as a risk. That person could receive a lower credit card limit. When you apply for a credit card, the credit card company conducts a “hard inquiry” on your credit report. Too many hard credit checks in a short period of time will likely impact your credit score.

Personal income and monthly expenses

Your income and housing costs may help determine your credit limit. If an applicant has a high income with a relatively low rent or mortgage, they may have more financial flexibility to manage credit card debts. Thus, they may qualify for a higher spending limit, depending on other factors.

Does a high-limit credit card affect your credit score?

Although a high-limit credit card doesn’t affect your credit score by itself, having more available credit makes it easier to maintain a lower credit utilization ratio.

For example, if you have two credit cards with a total credit limit of $5,000, and your balance is $2,500, your credit utilization ratio is 50%. But if you add high-limit cards that increase your total available credit to $25,000, and they don’t have a balance, your credit utilization rate for the same balance would be 10%. So, having high-limit cards may let you run a larger balance without your credit utilization ratio affecting your credit score, as long as you keep your credit utilization rate low.

What happens if you go over your credit limit?

Depending on the terms of your cardmember agreement, your credit card issuer may charge you a fee for going over your limit, or the transaction may be declined.

Can you raise the credit limit on your credit card?

If you don’t receive your ideal credit limit right after applying for a card, don’t fret. Issuers may increase credit limits on their own over time. And if you’ve used a card for a while without any missed payments or other negative activity, you can request a credit limit increase yourself. The card issuer will determine your eligibility based on your current financial situation.

Can your credit limit be reduced after it’s determined?

You might think that a high credit limit won’t decrease once you have it. But achieving a high credit limit doesn’t mean you can ignore the factors that determine your credit limit. Card issuers periodically review your credit score. If you’re consistently using a large percentage of your credit limit, your score may be affected, which FICO² explains, may lead to a lower credit limit.

Is it better to ask for a credit limit increase or apply for a new credit card?

Both applying for a new credit card and requesting a line increase may impact your credit score the same way, since they both result in hard credit pulls.

Did you know?

You may want to apply for a new card to get rewards only offered to new cardmembers. If you get a cash back credit card from Discover, we’ll automatically match all the cash back you’ve earned at the end of your first year. There is no limit to how much we’ll match.³

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Your individual credit history will determine whether it’s best to request a limit increase on an existing credit card or apply for a new card.

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There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.
FICO^® Credit Score Terms: FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal law or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.
Cashback Match: We’ll match all the cash back you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You earn cash back only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

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