The credit limit of your credit card is the maximum amount you can spend using your card in a month or in a billing cycle. It is determined by the credit card issuers and it can be different for different cards and for different customers. People sometimes wonder why they got a lower credit limit on cards which generally provides a higher limit to others. It depends on various factors, such as your credit score, income, credit utilization, and many more. To understand how these factors can play a huge role in determining your credit limit, keep reading the article:

How Banks Determine Credit Limit On Your Credit Card?

Credit History

Your Credit history can be the most important factor that is considered while determining your credit limit as it helps the bank/card issuer understand how risky/responsible you are as a borrower. If you have a good credit history and decent credit score representing that you are most likely to make your payments on time, there are high chances that you will get a credit card with a high credit limit. Whereas having a poor credit history and a bad credit score or having no credit history at all can result in a lower credit limit on your credit card.

Credit Utilization Ratio

The credit utilization ratio is the ratio of the credit limit you have spent to the total credit limit you have been assigned. If you use most of your credit limit or full limit each month, the card issuer/bank might think that you are very much in need of credit and hence can consider you as a risky borrower, providing a low credit limit to you. Utilizing a lot of your credit limit is not a good idea as it can also take your credit score down.  To maintain a good credit history and get a good Credit limit, is advisable to use only 30% or less of your credit limit.

Also read: How To Get A Higher Limit On Your Credit Card?


Your income also plays a huge role in determining how much credit limit will be assigned to you. Individuals having a high income generally get a higher credit limit as compared to the ones having an average or low income. Income doesn’t only mean your salary, but your other sources of earning can also be included in it and sometimes your total family income can also influence the decision of a credit card issuer on determining your credit limit. What you need to do is just show all your sources of income to them rather than just showing a regular salary.

Limits on Other Cards

If you are already having one or more credit cards, the limit on these cards can also be considered by the card issuer while deciding your credit limit. There are high chances that you will get a credit limit ranging around the limits on your other cads. For example, if you have credit limits of around Rs. 50,000 to Rs. 1 lakh in your current cards, you won’t get a limit as high as Rs. 5 lakhs directly after (exceptions are also there). You will most probably get a credit limit of Rs. 1.5 lakhs to Rs. 2 lakhs. However, an excellent credit score can help get even higher.

Employment Status

Your current employment status can also be a reason behind your high/low credit limit. Even if you have a great credit history but are not employed at the time when you apply for a credit card, the bank/card issuer might consider you as a risky borrower as you don’t have any source of income to repay your bills. Moreover, your type of employment (salaried/self-employed) can also affect the decision of your card issuer while determining your credit limit.

Other Factors

Other factors that are taken into consideration while determining your credit limit include your age, the economic conditions of the financial institution, and many more. If you are too young or too old, you might not be provided with a high credit limit as a very young person might be considered having less responsible financial behavior and a very old person might be considered risky. Moreover, if the bank is going through a financial crisis (or through a great loss), you may get a lower credit limit even if you have an excellent score.

Bottom Line

The banks/card issuers determine your credit limit based on various factors and fulfilling just one required condition is not enough but will need to fulfill most or all of the conditions if you want to get a high credit limit or a limit of your choice as some premium credit cards even come with no pre-set credit limits. All the major points that are considered by card issuers while determining your credit limit have been mentioned above. If you have any doubt regarding any point, you can ask in the comment section belo.

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