 TITLE: Understand Credit Card Limits and Your Credit Score CONTENT: How Credit Card Limits Can Affect Your Credit Score\n---------------------------------------------------\n###### Written by: Kristy Welsh\n_Last Updated: April 10, 2017_\nThere are many misconceptions on what a credit card limit is and how it can affect your credit score. If you are trying to rebuild your credit or just want to increase your credit score, you first need to understand how those credit card limits factor into your score and how the credit bureaus look at credit card limits.\nWe here at CreditInfocenter.com have answered a lot of emails regarding fixing credit and what goes into computing a credit score. Although we may not have all the info (since a lot of it is a guarded secret), we can address some of the common myths people believe regarding credit card limits.\nCredit Card Limit is Your Spending Limit\n----------------------------------------\nThis is a where a lot of people get into trouble. They feel the higher the credit limit is on their credit card, the more they can spend. When in fact, you should keep your spending to about 30 percent or less of your credit limit. So, if you have a credit card with a limit of $5,000, you should only be spending about $1,500 or less. Why so low you may ask? Well, the credit bureaus looks at how much \"available\" credit you have on your card so maxing out your credit card is NOT a good thing in the eyes of the bureaus. Statistically, consumers who use about 30 percent of their credit limits are less likely to have late pays or misuse credit.\n### Increase in Credit Limit Means You Can Charge More\nWell, obviously you could answer \"yes\" to that statement but you need to think about what will help you increase your credit score and build up good credit. Again, you want to follow the same rule of thumb as we discussed before, keep your available credit to credit limit ratio around 30 percent.\nLet's say you are paying your bills on time and ABC Bank offers to up your credit card limit from $5,000 to $7,000. So instead of keeping your spending to around $1,500 or less, you can now raise that to $2,100. But, keep in mind, increasing your spending may increase your monthly payments so you need to carefully analyze your monthly budget and long-term financial goals before stepping off into the deep end.\n### If I Pay Down My Credit Card Debt, My Limit Will Increase\nThat is not necessarily true. Many people learned this is not the case a few years ago when credit card companies slashed limits in a reaction to rampant over-spending. A lot of consumers did not even know their limits were decreased until they tried to purchase something. These were people who did all the right things, like paying their bills on time, keeping their balances low, but they were still caught in the slashing mayhem. Lowering your credit card limit is one thing the companies do not have to warn you about so don't get lulled into thinking they are going to raise it for you just because you paid down your debt.\n### You Are Going to be Stuck with the Same Limit Forever\nYou can ask for a higher credit limit by calling your credit card company, and you just might get it if you can show your financial circumstances have improved. You can also opt in for a program that allows you to go over the limit — for a fee. Before new federal credit card regulations kicked in, many companies were letting their customers go over their credit limits and then charging fees for the privilege. Now, customers must opt in for such programs.\nIf you have been paying your bill on time and your available credit ratio is around 30 percent, why not ask for an increase. A higher limit may be useful if you are expecting a special purchase in the future of if you just want the piece of mind you have a little extra cushion incase of an emergency.\nThe moral of our credit card limit story, don't let low credit limits get you down, and don't let high credit limits go to your head. Use your head instead to set your own reasonable spending limits. Understanding how these limits affect your credit score can mean the difference between a fair credit score and a good one. END