Definition
The maximum amount you can borrow on a credit card. Keeping your balance well below this limit can help maintain a good credit score.
What to consider
- Keep your spending well below your limit to protect your score.
- A higher limit offers flexibility but be cautious not to overspend.
- Regularly check your account to stay within safe bounds.
Real world scenarios
- Gabrielle requests a credit line increase after consistently paying her bills on time, improving her credit utilization ratio.
- To keep debt manageable, Jordan only uses about 20% of his card’s credit limit. This habit helps maintain a strong credit profile.
- Cindy monitors her credit card limit while shopping for big-ticket items, ensuring she doesn’t exceed the available amount.
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