Credit limit
Credit lineA credit limit is the most a revolving account, such as a credit card or a home equity line, is allowed to carry at one time, set by the lender. The limit minus the balance is the available credit, and the balance divided by the limit is its credit utilization.
What is a credit limit?
A revolving account has no fixed loan amount. It has a ceiling, the credit limit, and a balance that moves under it as charges and payments post. A card with a $5,000 limit and a $1,500 balance has $3,500 of available credit: what can still be charged before the limit is reached.
The lender sets the limit when the account is opened, and can raise or lower it later; the borrower can ask for a change but does not set it.
The limit is also the denominator of credit utilization. A balance is only a percent of something once there is a limit to divide it by, so the same $1,500 balance is 30% of a $5,000 limit and 10% of a $15,000 one.
How a credit limit works, with numbers
Two cards: one with a $5,000 limit and a $1,500 balance, and one with a $12,000 limit and a $1,200 balance. The first is at 30% utilization with $3,500 available; the second is at 10% with $10,800 available. Together the limits come to $17,000 and the balances to $2,700, so the two cards have $14,300 of available credit and a combined utilization of 15.9%.
- Limits, $5,000 + $12,000
- $17,000
- Balances, $1,500 + $1,200
- − $2,700
- Available credit
- $14,300
Why a credit limit matters
The limit sets two figures that a balance alone does not. Available credit is what the account can still absorb: the $14,300 in the example is the room left for charges across the two cards. Utilization is the balance as a share of the limit, and it moves when the limit moves, with no charge or payment at all. If the lender raised the first card's limit from $5,000 to $10,000, its $1,500 balance would go from 30% to 15% of the limit.
Across several cards, the combined utilization divides the total balance by the total limit, so a card with a large limit weighs more than one with a small limit. The credit utilization entry works that combined figure through.
Credit limit in Taiga Finance
Taiga Finance records a credit limit on a credit card account. In the account's details, under the balance, the “Limit” row holds it, with the placeholder “Add credit line” until one is entered. A HELOC on the Debt page has no limit field.
With a limit on file, the card's account drawer shows a “Utilization” bar reading the percent, the balance and the limit. On the Debt page, once at least one card has a limit on file, the rail's “Credit lines” block shows “Available credit” and “Utilization” across those cards; the “Available credit” breakdown lists each card's balance against its limit and totals what is available, with a footnote counting the credit accounts with a limit on file.
Accounts & balances →Key takeaways: Credit limit
- A credit limit is the most a revolving account is allowed to carry at one time, set by the lender.
- Limit minus balance is available credit; balance divided by limit is credit utilization.
- A change to the limit moves utilization with no charge or payment: the same balance is a smaller share of a larger limit.
- Taiga Finance keeps a card's limit in the “Limit” row of its account details, and reads available credit and utilization from it.
Questions about Credit limit
What is a credit limit?
The most a revolving account, such as a credit card, is allowed to carry at one time. The lender sets it. A card with a $5,000 limit and a $1,500 balance has $3,500 of available credit.
What is the difference between a credit limit and available credit?
The limit is the ceiling; available credit is the limit minus the current balance, the room left for charges. On a $5,000 limit with a $1,500 balance, available credit is $3,500.
Does Taiga Finance track my credit limit?
Yes, on a credit card account. Its details hold a “Limit” row, and with a limit on file the card's Accounts row shows its balance as a percent of the limit, its drawer shows a “Utilization” bar, and the Debt page rail totals “Available credit” and “Utilization” across the cards with a limit.