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 is a good credit limit?” Unfortunately, the simple answer is: 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 your credit limit:

  1. How Is Your Credit Card Limit Determined?
  2. How Credit Limits Affect Your Credit Score
  3. Credit Limits for Secured Credit Cards
  4. Can You Change Your Credit Limit?

1. How Is Your Credit Card Limit Determined?

According to The Balance, there are a variety of factors that can influence your credit limit, including:

  • Typically, the higher your income, the higher your credit limit. Of course, this is not always the case, as the other factors below can factor in as well.
  • Credit History. Your history of payments and high balances on other credit products will play a role in where your credit card limit is set.
  • Debt-to-Income Ratio (DTI). Card issuers can look at how much debt you have relative to your income, thanks to the information on your credit card application and credit report. A DTI of 20 percent is considered low, while a DTI of 40 percent or more is considered a sign of financial stress by the Federal Reserve.
  • Limits on Other Cards. If your credit report shows that you have high credit limits on other credit cards, it may influence another card issuer to approve you for a high credit limit.
  • Type of Card. Credit cards often have their own set of rules and guidelines that influence their credit limits. Some cards may have a set limit, while others have an established range that its cardholder will fit into.

2. How Credit Limits Affect Your Credit Score

Your credit score is based on a variety of factors and inputs: Payment history typically makes up 35 percent of the total calculation. Amounts owed typically makes up about 30 percent. Other considerations are length of credit history, about 15 percent; credit mix (having accounts such as mortgages, loans and credit cards), about 10 percent; and new credit (or credit inquiries received from new creditors) about 10 percent. In addition, other factors like credit utilization may be taken into consideration, so a high credit limit while carrying a low balance can be beneficial.

3. Credit Limits for Secured Credit Cards

For a secured credit card, you essentially set the credit limit, as it’s typically based on the amount of your security deposit. For example, if you deposit $1,000 on your secured card, your credit limit is $1,000.

4. Can You Change Your Credit Limit?

If your credit needs have changed since you first got your card, you can make a case for an increased credit limit by calling your credit card’s customer service department, or going to the card issuer’s website to make the request online. Among other criteria a cardholder must meet, the issuer also will consider whether the card has been used responsibly overall, such as the cardholder paying bills on time and avoiding maxing out the card.

If you are able to increase your credit limit, it will often lead to an improved credit score, as your credit utilization ratio will automatically drop. Of course, this benefit is based on keeping your credit balances low.

In the end, there’s no such thing as a “good” or “bad” credit limit — it depends on the individual account holder’s use of their credit card.

Published December 12, 2016.

Updated May 6, 2020.

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.