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What is a credit limit and how does it affect your credit score?

You’ve probably heard the term ‘credit limit’ before, but do you know how it relates to your credit score? Get confident about your credit limit, so you can make the right credit choices for you.

29 August 2023Jade Harvey 2 min read
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Image by David Marcu on Unsplash

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Knowing how your credit score and credit limit affect each other can help you feel more confident about your credit choices.

The first thing to understand is the difference between a credit limit and a credit line – they’re not the same but they are similar.

A credit line is an account that lets you borrow credit when you need it. There are different types of credit line, and you can have several lines of credit at once. So, if you had a credit card and a loan, you’d have two lines of credit. If you had two credit cards and one loan, you’d have three lines of credit, and so on.

Each credit line has a limit that you can borrow up to, which is your credit limit. Your overall credit limit is the total of all your credit limits added together.

For example, you might have:

  • £2,000 on a credit card
  • and £3,000 on a loan
  • This would make your total credit limit £5,000

A common myth is that increasing your credit limit will damage your credit score. But this isn’t strictly true. Increasing your credit limit could actually boost your credit score.

If you increase your credit limit but keep your spending low, it looks like you’re using less credit as a proportion of your total spending. This makes you look less risky to lenders. They’ll trust you more and your credit score could go up as a result.

Here’s an example:

Let’s say your credit limit is £500 and your balance is £250. That means you’ve used 50% of your available credit.

If your lender then increases your credit limit to £1,000 but you keep your balance at £250 you’re now only using 25% of your available credit.

Just as your credit limit can affect your credit score, your credit score can also affect your credit limit.

The higher your credit score, the more likely you are to be offered a higher credit limit (and with better rates). That’s why it’s important to build a good credit history.

Don’t know your credit score? Get your score and report today – for free, forever. Every week we’ll send you a credit report, which tell you what’s affecting your credit score and give you personalised tips to improve or maintain it.

When you apply for a credit card or loan, the credit limit and interest rate isn’t set in stone. It can change after you’ve applied.

That means you could be accepted for credit only to discover the credit limit is lower than you were shown and the interest rate is higher.

Our Triple Lock guarantee is different. It makes those last-minute changes impossible by securing the credit limit and interest rate of your credit card or loan before you apply… and we’ll even tell you if you’re pre-approved.

Find out more about Triple Lock.

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Written by Jade Harvey


Having worked as a financial copywriter for the past several years, Jade is dedicated to helping you feel clear, calm and confident about your credit choices.