Why is my credit limit so low?

Your credit limit may be low because you’re just starting out with credit and haven’t built up a long enough credit history to warrant a high credit limit. It’s also possible that you had a low credit score or low income when you applied for your credit card, so the issuer didn’t trust you with a higher limit. Or, the card you were approved for may extend the same minimum starting credit limit to all new cardholders.

Reasons Why Your Credit Limit Is So Low

Insufficient annual income

You must demonstrate that you can afford to make at least the minimum payment every month, so you can expect your credit limit to be proportionate to your annual income.

Little or no credit history

Most issuers like to see a track record of borrowing and paying back debt on time before they will offer a high credit limit.

Bad credit score (below 640)

A poor credit score signals to issuers that you may be a credit risk. Unsecured credit cards for bad credit typically come with low starting credit limits to minimize the issuer’s risk. Likewise, secured credit cards require a security deposit that determines your credit limit and serves as collateral on the account, which means less risk for the issuer.

Starting credit limit is the same for all cardholders

Some credit cards for bad credit, or even no credit, may have a standard credit limit that everyone receives upon approval, regardless of other factors.

High credit limits on other accounts from the same issuer

If you have a high credit limit on an existing credit card, you might get a lower credit limit if you are approved for another credit card from that same issuer. Unfortunately, issuers don’t publicly disclose their maximum credit limits.

Pressure on the issuer’s bottom line

Credit limits tend to get tighter during economic downturns, so a credit card company may assign you a low credit limit simply as a way to mitigate its credit risk.