If you have no credit history, getting approved for a credit card can be tough. Generally, you need to apply for a secured credit card and pay a security deposit. If it's your first credit card, it will likely have a low credit limit, but don't worry, that's perfectly normal.
Your first credit limit may be as low as $100 if your first credit card is from a retail store, but you might be approved for a slightly larger credit limit up to $500 if your first credit card is issued by a bank or credit card company. It's unlikely that your first credit limit will be greater than $1,500 unless you already have a credit history, such as a mortgage or car loan on your credit report.
Why Your Limit May Be Low
Credit history is one of the factors credit card issuers use to decide an applicant's credit limit. A person with a history of managing credit well will have a better chance of getting approved for a biggercredit limit. However, because you're a brand new credit card user, you don't have a history of using credit cards responsibly. Your credit card issuer doesn't know how much credit you can handle, so it will usually start you off with a small limit.
Average Credit Card Limit
Credit reporting agencies—like Experian, TransUnion, and Equifax—compile your credit history to help credit card companies decide your credit card limit. People with credit scores between 720 and 850 are considered super-prime consumers, and those with scores below 580 are considered subprime. The average credit limit for super-prime consumers is $11,000, and $1,200 for subprime consumers. Some high-net-worth individuals with excellent credit can have six-figure credit limits orno preset spending limitsat all. These individuals have higher credit limits because of their outstanding credit history and ability to repay high balances.
Managing a Low Credit Limit
It's better to start small until you're used to handling credit, so don't be disappointed by your initial credit limit. You won't get too deep into credit card debt as long as your credit limits keep you from overextending yourself. As you demonstrate that you canuse your credit card responsibly—by paying your bills on time and avoid maxing out your credit card—you'll qualify for higher credit limits over time.
Some credit card issuers will increase your credit limit automatically after several months of timely payments. Others only increase your credit limit upon request. Wait until you've made your credit card payments on time for at least six months before you request a credit limit increase.
How to Get a Bigger Initial Credit Limit
You may be able to get a higher credit limit on your first credit card by applying jointly with someone who already has an established credit history and good income. Another option is applying for asecured credit cardwhereby you place a security deposit for the amount of credit you'd like.
For example, you'd make a $2,000 security deposit for a $2,000 credit limit. With a secured credit card, your security deposit is returned to you as long as youkeep the account in good standing.Starting with a bigger credit limit, and managing it responsibly, will make it easier to get approved for unsecured credit cards with larger limits. Your security deposit is off-limits until you close your credit card, so you should only use money you can spare during that time.
Getting a Credit Limit Increase
No matter what credit limit you start with, there's always a chance for an increase as long as you're not spending too much of your limit, making your payments on time, and managing the rest of your credit well. Many credit card issuers review your account regularly and raise your credit limit automatically if you've managed your credit well. Capital One, for example, automatically increases the credit limit on many of their credit cards after you've made your first five monthly payments on time.
If your credit card issuer doesn't raise your limit automatically, you canrequest an increaseonline or by phone. When you request a credit limit increase, your credit card issuer will review your account history, your credit history, your current monthly income, and other debt obligations. If these factors are favorable, you have a good chance of having your credit limit increase request approved. If your request isn't approved, the credit card issuer willsend a letter explaining why. The information in the letter can help you determine what habits you need to change to be approved for your next credit limit increase.
Frequently Asked Questions (FAQs)
What is a credit limit?
Your credit limit is the maximum amount you can borrow from a credit issuer at any given time. It typically applies to revolving credit accounts like credit cards or lines of credit. Once you reach your limit, you will no longer be able to borrow additional funds until you pay down your balance below the limit.
What happens if you go over your credit limit?
You typically cannot exceed your credit limit. If you attempt to spend more than the maximum, your credit card will usually be declined and locked until you make a payment. However, if your card issuer allows you to spend over the limit, you may be hit with steep fees and increased interest rates.
How much of my credit limit should I use?
The percentage of your total available credit that you use in a given month is called your "credit utilization ratio." It is a significant factor in your credit score and will have a negative impact on your credit if it runs above 30%. That means if your total credit limit is $10,000, you should keep the total of your balances below $3,000.
FAQs
In that case, you could consider a limit of $500 or more to be a fairly good starting limit. However, the best credit limit for your first card is one that you can pay back on time each month as you spend with your card.
What is a good beginner credit limit? ›
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.
What is a good line of credit for a first credit card? ›
If you have good credit — a FICO score of 670 or higher — you'll likely be approved for a higher credit limit than you would with fair credit. That said, limits on these cards can still range from $500 to $1,000 for first-time cardholders, though you should be able to qualify for larger limits over time.
How much of your first credit card should you use? ›
Bottom Line. Your credit utilization rate affects your credit score. Try to keep your overall credit use to about 30% of your overall credit limit, if not lower. Extend your overall credit availability by applying for additional lines of credit, but don't apply for too many at once.
What should be ideal credit card limit? ›
Credit Limit is the maximum amount that you can spend using your credit card at any given time. The limit is set by the credit card provider. You should aim to spend about 30% of the credit limit and never go beyond the assigned limit. This will ensure you get a good credit score.
What is a good credit limit for a 19 year old? ›
Good Credit Limits by Age Group
| Age Group | Good Credit Limit |
|---|
| Gen Z (18-24) | $9,000 |
| Millennials (24-39) | $22,000 |
| Gen X (40-55) | $34,000 |
| Baby Boomers (56-74) | $39,000 |
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The average credit card limit in the UK is between £3,000 and £4,000, though the limit you get will very much depend on your income and credit history. If you've a lower income and/or a poor credit history, you're likely to get limits starting around £200 with a maximum of £1,500.
How much credit should a 25 year old have? ›
Average Credit Scores FAQs
Consider yourself in “good” shape if your credit score is above the average for people in your age group. Given that the average credit score for people aged 18 to 25 is 679, a score between 679 and 687 (the average for people aged 26 to 41) could be considered “good”.
What credit score does an 18 year old start with? ›
At face value, "What does your credit score start at?" can be a trick question. Turns out, you don't actually start with a credit score at all. You're born outside the system. Even when you turn 18, you aren't automatically assigned a credit score.
Is 1500 good for a first credit card? ›
A $1,500 credit limit is good if you have fair to good credit, as it is well above the lowest limits on the market but still far below the highest. The average credit card limit overall is around $13,000. You typically need good or excellent credit, a high income and little to no existing debt to get a limit that high.
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
When should I get my first credit card? ›
Late Teens / Early 20s
At age 18, you may be eligible for a credit card in their own name. If you don't have a credit history by this time, getting a card now will help you begin to establish one. That will be important down the line, when it comes time to rent an apartment or apply for a mortgage.
Should I pay off the smallest credit card first? ›
Debt Snowball
List your debts from smallest to largest (ignoring the interest rates). Pay minimum payments on everything but the smallest debt. Throw as much money as possible toward the smallest debt until it's paid off.
Is a 15k credit card limit good? ›
A $15,000 credit limit is objectively good. But you might think a $15,000 credit limit is bad if your company needs to charge $25,000 every month. Having to make multiple card payments just to use your card is inconvenient at best.
What happens if you use 100% of your credit limit? ›
However, it is not advisable to use up 100% of your credit limit on a purchase. This adversely affects your credit score in the long run," he said.
Is a 500 credit card limit good? ›
A $500 credit limit is good if you have fair, limited or bad credit, as cards in those categories have low minimum limits. The average credit card limit overall is around $13,000, but you typically need above-average credit, a high income and little to no existing debt to get a limit that high.
Is 5000 a good credit limit in UK? ›
Is a £5000 credit limit good or bad? The average credit card limit in the UK is currently between £3000 and £4000. As a result, many UK card customers would see a 5000 credit card limit as good.
What is a normal credit limit for a 25 year old? ›
Generation Z (18-25): $11,290
Baby boomers have the highest overall credit limits, and Gen Zers have the lowest. That's expected. Credit issuers typically start new credit card users with low limits, then bump these up as users prove themselves trustworthy.
What is the credit card limit for 50,000 salary in the UK? ›
The average credit limit in the UK currently lies somewhere between a 3000 credit card limit and a 4000 limit. However, we have often seen that some of the UK card companies can still be more generous with their credit limits, than certain other card companies.
