What is the credit limit? Credit line?
Answered on Thursday, August 5th, 2010 by
James Williams

Credit limit, also known as a credit line, is the maximum amount of credit extended to you by your credit card company. Basically it is how much you can charge to your card. Usually the higher your credit score is, the higher the credit limit is that is set for your account. Your credit limit influences your credit history progress, as about 30% of data used for credit score calculation is based on your credit line – its size and how much of it you use. This ratio between available credit and borrowed amount is called credit utilization, and if your balance is close to credit limit, it is viewed as risky by lenders. Usually higher credit limits are available for people with good or excellent credit history and also have low interest rates, 0% intro APRs, and a whole range of benefits for best customers. View our best offers on Best Credit Cards page of our site.

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As a general rule, your credit limit is based on your creditworthiness; credit issuers look at your credit score in order to determine what credit limit to award you.

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