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Does Your Credit Card Limit Measure Up

Are you aware of your credit card limit, the total dollar amount that your credit card issuer will generally allow you to spend without involving penalties, fees, or declined transactions? If you do not spend anywhere close to your limit, you may not care about it – but you should. Your credit card limit plays a role in your credit score, and vice versa.

According to data from Experian, one of the three major credit bureaus along with Equifax and TransUnion, the average credit card limit in the US as of December 2016 was $8,071. However, average credit limits vary greatly with cardholders credit scores.

Borrowers with Deep SubPrime credit, defined as a credit score of 300-499 on the VantageScore system, have an average credit limit of $1,834. On the other end of the scale, borrowers with SuperPrime credit (credit scores above 781) merit an average credit limit of $11,357. SubPrime credit (credit score 500-600) cardholders have an average limit of $2,645. NonPrime credit (601-660) produces an average $4,674 limit, and Prime credit (661-780) yields an average limit of $7,593.

Its reasonable that those with lower credit scores have average lower credit limits, based on the risk of non-payment. Credit scores are derived from your credit report, which contains information on your record of borrowing and repaying money. If you have a demonstrated history of missed or late payments, you pose a greater risk to a lender – therefore your credit score will be lower and your credit limit will follow suit. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

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