Credit card companies offer a range of credit limits, with the minimum credit limit being the lowest offered to new applicants. Credit limits are determined by credit scores, with those with better scores receiving higher limits. Credit card companies may offer credit limit increases over time.
The term minimum credit limit is often used in connection with credit card accounts. When a person is approved for a credit card, the credit card company usually places a limit on the amount they can charge using the card. Often, however, a credit card company will have a range of credit limits that it will offer to cardholders, with the minimum credit limit being the lowest limit that it will offer to new credit card applicants. In most cases, people with the lowest credit scores have credit limits closer to the minimum, while those with better credit scores may enjoy higher limits. While a person can start with the minimum credit limit, he or she may not necessarily maintain that limit for as long as they have the card; Credit card companies often offer credit limit increases.
In many cases, a person who wants to apply for a credit card considers the minimum and maximum credit limits of the credit card company. For example, a credit card company may advertise a minimum credit limit of $300 United States Dollars (USD) and a maximum limit of $3,000 USD. Basically, this means that a person approved for a credit card from this company will have a credit limit of at least $300 USD but no more than $3,000 USD.
Credit card applicants typically have no way of knowing what their credit limits will be before applying for a credit card. Most credit card companies decide how much credit to extend after checking an applicant’s credit score. A credit card company typically uses an applicant’s credit score, as well as other information the applicant provides, to decide whether the applicant is a high risk or low risk loan. A person with poor credit is generally high risk and will likely receive a limit close to the minimum from the company. On the other hand, someone with a high credit score could possibly receive the maximum credit limit, or close to it.
Most credit card companies offer opportunities for credit card holders to increase their credit limits. Even someone who starts with the minimum credit limit can enjoy an automatic credit limit increase after they have proven themselves responsible by making payments on time. Others may call their credit card companies to request increases after they have held up payments for a significant period of time.
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