How Is My Credit Card Limit Determined?

Credit card limits are meant to reflect how much money an issuer thinks cardholders can manage responsibly. To determine credit limits, issuers look at everything from past payment history, to income, to credit utilization, to how much an applicant pays for their rent or mortgage.

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Your credit score can be considered a very important factor when determining the credit limit. But a high score alone does not necessarily guarantee a certain credit limit or even card approval.

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 increase your odds of a high credit limit is to make sure all the components that affect your credit score are in good standing.

Payment History

Your payment history — which can account for a significant percentage in credit scoring models — is another measure of your creditworthiness. The thinking typically is, if a cardholder has paid their bills on time in the past, odds are they’ll do so in the future.

If you’ve never missed a payment in over twenty years of credit card use, in the eyes of the credit card companies you’re probably lower of a non-payment threat. 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. A lower credit utilization — less relative credit in use — will generally be better for card approval and credit limit determination.

Credit card issuers may look at both overall credit utilization and utilization on individual lines of credit when determining the size of 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, and will generally help improve your odds of a higher limit — so long as your past credit history is positive.

Again, if you’ve never missed a payment in over twenty years of credit use, that’s going to help your chances of approval with a higher credit card limit. If your credit history is shorter, it’s harder for issuers to predict how you’ll use a large line of credit and they’ll likely start you off with something lower.

Personal Income and Monthly Expenses

Applicant salaries and housing costs also may be used as factors to help determine credit limits. If an individual has a high salary with a relatively low rent or mortgage, odds are they have more discretionary income and thus may qualify for a higher spending limit.

Recent Inquiries

A person who’s applied for a handful of credit cards — or other lines of credit — in a short period of time may be viewed as a risk for issuers and could receive a lower credit card limit. Although there are no specific guidelines on how to stagger credit applications, it’s generally wise to spread them out over time to help prevent issuer concern.

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If you don’t receive your ideal credit limit right after applying for a card, don’t fret. Many issuers have been known to 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 an increase yourself.

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.

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