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What is a Good Credit Limit?

Last Updated: January 15, 2024
3 min read

Key points about: good credit limits

  1. Your credit limit is determined by several factors, including your credit history, income, and debts.

  2. Your debt payment history, amounts owed, credit mix, and other factors all make up the calculations for your credit score and, eventually, the credit limit offered to you.

  3. Responsible credit use may result in your lender providing you a larger credit limit.

If your application for a credit card is approved, one of the first pieces of information you’ll receive is your credit card limit, which is the maximum amount of money you can charge. You may be asking yourself, “What’s a good credit limit to have?” Unfortunately, there’s no simple answer. It’s different for each person.
 
Credit card limits can vary greatly, sometimes by thousands of dollars. So, if you’re granted a $500 credit limit, is that “bad” compared to a $10,000 limit? Or is a lower limit better? Consider these guidelines to help you understand what’s a good credit limit for you.

How is your credit card limit determined?

There are a variety of factors that can influence your credit limit, including:

  • Current income, debts, and your debt-to-income ratio (DTI), which compares the total amount you owe to what you earn;
  • Credit history and credit score;
  • History with the creditor you are applying to;
  • Creditor’s goals and the current economic environment.

How credit limits affect your credit score

Your credit score is based on a variety of factors and inputs, some of which are related to your credit limit. For your FICO® Score, payment history typically makes up the largest category of the total calculation, while amounts owed is still a considerable factor in the FICO® Score calculation.1 Other considerations are length of your credit history, your credit mix (having accounts such as mortgages, loans, and credit cards), and new credit (or credit inquiries received from new creditors).

In addition, other factors like credit utilization rate may be taken into consideration. So, for example, if your balance is around $500 and you have a high credit limit, such as $5,000, your credit utilization ratio will be low (10%), and that can be beneficial to your credit score. If your credit limit is only $1,000, and you have the same $500 balance, your credit ratio will be higher (50%), which could lead to a lower credit score.

Credit limits for secured credit cards

If you have poor credit, you may have a hard time qualifying for credit cards with a high credit limit. In that case, a secured credit card may be the best credit card for you to start out with. 

Did you know?

A secured credit card requires a security deposit, which is used as collateral for your credit limit. For example, the Discover it® Secured Card requires a refundable security deposit, which will equal your credit line, of at least $200.2 So, a good limit for you would take into account whether you can afford a deposit in that amount.

How can I increase my credit limit?

You may be able to access more credit by requesting a higher credit limit.

If your credit needs have changed since you first got your card, you may be able to make a case for a credit limit increase by reaching out to your credit card’s customer service department or going to the credit card issuer’s website to make the request online.

Among other criteria a cardmember must meet, the issuer may also consider whether the card has been used responsibly overall, such as paying bills on time and avoiding maxing out the card.

Lower vs. higher credit limits

A higher credit limit could be a good choice for you. However, it depends on your unique circumstances. If you’re able to stay on top of your balance and make on-time payments, a higher limit could increase your available credit and reduce your credit utilization ratio. However, if a higher limit may tempt you to spend more than you can afford, then a lower credit limit may be better. 

Keep in mind, a request for a credit limit increase may result in the credit card company placing a hard inquiry on your credit report, which could impact your credit score.

So, what’s a good credit limit to have?

In the end, there’s no such thing as a “good” or “bad” credit limit—the best credit card limit for you depends on the way you use your card.

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  1. 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 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.

     

  2. Secured Card Deposit Range: If approved, you must make a minimum security deposit of $200 (or more, in increments of $100 up to $2,500), which will equal your requested credit limit. Discover will determine your maximum credit limit by your income and ability to pay.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.