Credit Limit

Credit Limit
The amount of credit that a financial institution extends to a client. Credit limit also refers to the maximum amount a credit card company will allow someone to borrow on a single card. Credit limits are usually determined based on information contained in the application of the person seeking credit, or that person's credit rating.

A borrower's credit limit may be raised after he or she exhibits timely and full repayments. However, having a high credit limit and multiple lines of credit may hurt a person's overall credit rating. In these cases, new potential lenders can see that the applicant has access to a large amount of debt, which may lower the chances that this person will be able to repay his or her debts in the future. As a result, new potential lenders might be less likely to offer an additional source of debt.

Investment dictionary. . 2012.

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  • Credit limit — A credit limit is the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit (sometimes called a credit line, line of credit, or a tradeline). For example, it is the most that …   Wikipedia

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  • credit limit — UK / US noun [countable] Word forms credit limit : singular credit limit plural credit limits the maximum amount of money that a customer can borrow using a particular credit card account …   English dictionary

  • credit limit — / kredɪt ˌlɪmɪt/ noun the largest amount of money which a customer can borrow ♦ he has exceeded his credit limit he has borrowed more money than he is allowed to …   Dictionary of banking and finance

  • credit limit — ➡ credit cards * * * …   Universalium

  • Credit limit —   The maximum that a customer can borrow. Limits can be established so that they relate to only one credit facility, or if the customer has several credit facility lines, then you can construct a hierarchy of limits for the customer. Limits can… …   International financial encyclopaedia

  • credit limit — high amount of money a person may receive on credit; total amount of credit that can be allotted …   English contemporary dictionary

  • credit limit — The maximum amount of *credit offered to a customer. The use of credit limits is a common *internal control over *accounts receivable …   Auditor's dictionary

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