Mastercard credit limits are based on credit history, income, assets and existing debt obligations. There’s nothing special about Mastercard credit limits, in other words, at least as they compare to the spending limits on Visa credit cards. The one thing that Mastercard and Visa have in common in this regard is that neither one is responsible for setting spending limits. Dozens of different banks and credit unions issue Mastercard credit cards, Visa credit cards or both. And they determine what limit you get upon account approval as well as when you’re eligible for an increase.
American Express and Discover – the other two major card networks – are a slightly different story because they issue their own cards. So they set the limits. But you shouldn’t go looking for any sort of trends or tricks related to such broad groups of cards. Just because someone you know got a certain credit limit with a certain credit score doesn’t mean you’ll get the same limit with the same score. It’s impossible to know exactly how each issuer weighs the different elements of an applicant’s finances. But you can at least know what they all take into consideration.
Here’s what determines your Mastercard credit limit:
Credit history. The information from your credit report is used to calculate your credit score, and each section of the credit score range is labeled with a credit rating – from “bad” to “excellent.” A better credit rating often means a higher credit limit. For example, Mastercards for people with bad credit usually have minimum limits of a few hundred dollars, which you may have to prepay with a security deposit. Mastercards for excellent credit, on the other hand, could have starting limits of $10,000 or more.
Income and debt. How much you can afford obviously is critical to the spending limit you’re approved for. And a few different things factor into affordability: how much you make, what other assets you have, and how much debt you already owe. In other words, how much more spending power can you be expected to handle responsibly? Since more income and less debt generally lead to higher limits, asking for a raise, moving to a better job, working some extra hours, paying off amounts owed and reducing your credit utilization can all help your case.
Red flags. Certain negative items on your credit report – such as a tax lien, bankruptcy, collections account or court judgment – alone can scare off many lenders, even if those events are in the past.
So if you’re looking for a higher credit limit, make sure your credit history is in good shape. Always pay on time, keep your utilization below 30%, and continue being responsible in as many ways as you can. To help track your progress, you can sign up for a free WalletHub account and get access to your credit scores and reports, updated every day, along with personalized recommendations for credit cards with high approval odds.
And don’t forget that if you don’t start off with a limit you like, you can always ask for an increase after 6 months or more of paying on time.
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