Credit Limit

Full Explanation

A credit limit is the maximum outstanding balance allowed on a credit card or revolving credit facility. Issuers set limits based on income, credit score, existing debts, and credit history. Credit utilization — your balance as a percentage of your credit limit — is a key factor in your credit score. Keeping utilization below 30% is generally recommended for good credit health. In Canada, you can request a credit limit increase from your issuer, which typically triggers a soft inquiry (though some do a hard pull). Repeatedly maxing out your credit limit signals financial stress to lenders.