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What Determines Your Credit Card Limit?

Better understand your credit limit and how it could increase or be lowered

When American Express makes credit limit decisions, one factor we take into account is the customer's overall level of debt relative to his or her financial resources known to us. Also, we look at a variety of factors that comprise a customer's overall credit profile, which includes, among other things, your  credit bureau reports and scores at the time you apply, payment history (if any) with American Express, reported income and usage habits (if known). Credit card limits are not set in stone, they could increase or decrease over time based on your spending and payment habits and overall credit score.

Why did my credit card limit increase?

As your credit improves you may be eligible to borrow more and have an increased credit card limit. In some cases your credit card company will contact you to let you know you may qualify and ask if you want to apply for increased funds. This can be beneficial even if your spending habits remain unchanged since it could improve your debt-to-credit ratio and provide more of a cushion in case of emergencies. Alternatively, if your credit practices have been strong for some time now, your card company may simply raise your credit limit and notify you of the change. You may also be able to request an increase – especially if you’ve curated a history of paying bills on time.

Could my limit decrease?

If you fall behind in your payments or your charge habits rise above your usual norm, including consistently going over your current credit limit, your credit card company may lower your limit. For this reason, it’s important to know your credit limit, monitor your spending habits and reach out to your credit card company to make changes proactively if necessary. You can check your limit on your monthly statement or by logging in to your account online.

How can I improve my credit?

Interested in a higher credit card limit? Want to ensure you’re not making decisions that could affect your credit score? While each customer's situation is different, and decisions are made on a case-by-case basis, what remains the same is that understanding and managing your credit wisely are critical. Click here to read the series on building and managing your credit by Personal Finance Expert Jean Chatsky.