Definition
The maximum balance a lender allows on a credit card or line of credit. Spending relative to the limit is your utilization, a major score factor, and issuers can raise or cut limits based on behavior.
Why it matters
The limit is not a spending target; it is the denominator of your utilization. A higher limit with the same spending lowers utilization and typically helps the score, provided the extra room stays unspent.
Example
A card with a $6,000 limit carrying a $1,800 balance shows 30% utilization. After a limit increase to $9,000 with the same balance, utilization drops to 20% and the score usually ticks up.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.