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What is a credit limit?

The credit limit on a credit card is the maximum amount you can borrow on that card at any one time. The credit card provider will set your limit based on what you would like your limit to be and how much they feel you can afford to borrow.

They'll look at various factors to assess this and typically you won't know what your credit limit will be when you apply for your credit card.

It’s important to think about what is affordable for you. Staying within your credit limit helps maintain your credit score by showing you can manage debt sensibly.

How is your credit limit calculated?

A lender will look at your credit history as well as other key factors to decide whether to accept your application and what credit limit to offer.

Some of the key factors a lender will consider as part of their affordability calculations are:

  • your earnings – in particular, what's left over after your monthly expenses
  • your debts – for example, a mortgage, personal loans or other credit cards
  • your current credit – the limit on any credit or store cards or overdrafts you have available 
  • your repayment history – whether you've missed payments on debts in the past

Their goal is to offer you a credit limit they're confident you can afford.

What if you go over your credit limit?

If you make a purchase that pushes your debt beyond your credit card limit, the credit card provider may decline the purchase. However, on some occasions they may let it go through.

If you do go over your limit, it can have consequences. You'll normally be charged a fee and there may also be longer-term effects. Going over your limit could damage your credit rating. If it happens repeatedly, your credit card provider may lower your credit limit or close your account altogether.

Can you change your credit limit?

Usually you can request to increase your credit limit by contacting your credit card provider. You'll need to tell them the new credit limit you'd like. They'll look at your card use and credit history to make a decision. They may approve the credit limit increase, offer a lower increase or refuse altogether.

Your card provider will have a policy on credit limit increases. Some only offer an increase once you've had the card for 6 months or a year.

You can also request to decrease your credit card limit. Reducing your unused credit can make it easier to get a loan or mortgage, as you'll be reducing the amount of other credit you have available. It may also help reduce any temptation to spend.

Top tips to increase your credit limit

If you do want to increase your credit card limit, there are some things you can do to help improve your chances:

  • never miss a payment – even paying your credit card bill one day late could impact your chances of getting a credit limit increase in future
  • give it time – the longer you've had your card, the more likely you are to get a credit limit increase
  • use your card regularly and sensibly, without going too close to your credit limit 
  • don't ask too often – requesting a credit limit increase too many times can affect your credit score


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