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Do low limit credit cards help your credit score?

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While this site is based around increasing your credit limit, it’s worth asking the question as to whether low limit credit cards will help your credit score, or if it’s only worth it if the card has a higher limit.

The answer is that yes, they can help.

For one, they can help you to establish a credit history. 15% of your credit score comes from the length of your credit history, so it helps to have a history started as early as possible. When you don’t have a credit history, sometimes it is only possible to get a card that has a low limit, because that is all that you will be given. In these cases (as always, with the caveat that you use credit responsibly), a low credit limit is better than no credit limit.

The other way that it can help is by improving your credit utilization rate, or the balance you are carrying compared to your total limit. In this case, even a low credit limit will help that, because it means the amount that you could borrow goes up. Again, as long as you are not actually using all of your credit (which is always a bad idea), even a low limit credit card will increase your total limit, lowering your utilization, and helping your credit score.

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