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What is a Good Credit Limit?

Last Updated: December 4, 2024

5 min read

Table of contents

Key points:

Your credit limit is determined by several factors, including your credit history, income, and debts.
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.
Responsible credit use may result in your lender providing you a larger credit limit.

If your application for a credit card is approved, your credit card issuer will offer you a set credit 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:

Your debt-to-income ratio (DTI), which compares the total amount you owe across credit accounts to the total amount you earn
Your credit history and credit score
Your history with the specific credit card company
The credit card issuer’s objectives
The current economic environment

Credit limits for secured credit cards

If you don’t have a particularly good credit score, 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 deposit as collateral for your credit limit. For example, the Discover it^® Secured Card requires a refundable security deposit of at least $200.¹ So, to find the best credit limit for a secured card, consider what deposit you can afford.

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Good credit limits for student cards

Student credit cards often come with lower credit limits than standard credit cards. But a lower limit isn’t necessarily a bad thing. Student cards are designed for people who may be new to managing credit and at the beginning of their careers. With a smaller credit limit, cardmembers can work on building their personal finance skills without accruing a massive balance. That way, you’re less likely to have unmanageable credit card debt.

How credit limits affect your credit score

For your FICO^® Score, your payment history is typically the most influential category. However, your credit utilization rate is still a considerable factor in the FICO^® Score calculation.² Your credit utilization rate is the total amount you owe compared to your available credit, your total credit limit across all credit card accounts. If your credit card balance takes up too much of your credit limit, your credit score may suffer.

So, for example, if your credit card balance is $500 and you have a $5,000 credit limit, your credit utilization ratio will be low (10%), which is better for your credit score. But if your credit limit is only $1,000, the same $500 balance results in a higher credit utilization ratio (50%), which could lead to a lower credit score.

When it comes to your credit score, a high credit limit is sometimes an advantage over a low credit limit. But keep in mind that a higher credit limit may make it easier to accumulate higher balances, and unmanageable credit card debt may lead to missed payments, which could hurt your score.

Other credit considerations include the 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).

How can I increase my credit limit?

You may be able to access additional credit by requesting a credit card limit increase from your card issuer.

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.

To determine whether you qualify for a credit limit increase, credit card issuers may assess changes in your income or credit score. They typically also consider whether you’ve used your card responsibly overall by paying your bills on time and keeping your balance low.

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 can have a negative impact on your credit score.

Lower vs. higher credit limits

A higher credit limit could be a good choice for you. The best fit 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 help you avoid credit card debt.