Glossary
Credit limit
A credit limit is the most you can owe on a credit card at once, set by the issuer from your income and credit history; your balances divided by your limits is your credit utilization.
Issuers can raise or lower limits. A higher limit with the same spending lowers utilization; a cut can raise it without any change in what you owe.
Work it out
Related terms
- Credit utilizationThe share of your credit card limits you are using, overall and on each card; lower is better for credit scores, and under 30% (ideally under 10%) is the usual guidance.
- Credit scoreA number, usually from 300 to 850, that summarizes your credit report to predict how likely you are to repay; lenders use it to decide whether to approve you and at what rate.
Sources: myFICO: What's in my FICO scores