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Credit Limit Calculator

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One thing that not many people know much about when it comes to credit limits is how the creditors actually determine your credit limit. If you want to know how much credit limit you can expect, or what your chances of getting an increase in your credit limit are, in can help to know how it is determined in the first place.

As with most things, the answer is not that straightforward. According to Bankrate, there are a few different ways that the limit can be calculated.

In some cases, it will simply be that the credit issues has a few different cards, and the limit for those cars is the same no matter who applies for them. For example, a platinum version of their card might have a $3,000 limit, and everyone who qualifies for that card gets $3,000, whether they are a strong candidate or just barely made the qualifications.

An approach that might be more common is for a card to have a specific range, such as from $2,500 to $5,000 for the card. Then, when you apply for the card and are accepted, where your limit falls within that range could be determined by your credit score (among other possible factors). This is slightly more complex than the first scenario, though still not terribly complicated.

Other times, the issuer might be even more complex when determining your limit, looking at things beyond just your credit score. In these cases, the issuer might look at your income to debt ratio, just your income, or the amount of total credit that you have available to you. This way, they can get a more accurate portrayal of your finances, which can help them determine the proper credit limit.

Of course, as we discuss on this site, just because you start off at a certain credit limit does not mean that you will always have that limit. After a certain amount of time, you should be able to request for it to be raised, and if you have been a good customer, oftentimes the credit issuer will oblige and raise your limit.

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