Credit Limit

A credit limit is the maximum amount of money that a credit card issuer allows you to borrow on a credit card. It represents the total amount of credit that is available to you.

Your credit limit is determined based on your credit history, income, and other factors. It’s important to stay below your credit limit to avoid over-limit fees and to maintain a good credit score.

Using a high percentage of your credit limit can negatively impact your credit score, so it’s generally recommended to keep your credit utilization ratio (the amount of credit you’re using compared to your total credit limit) below 30%.

• Related Terms: Credit Card, Available Credit, Credit Utilization Ratio, Credit Score, Debt