When you borrow money from a bank, a credit card company or an automobile company or other lenders, then it goes by the name of credit. A limit to that would mean the extent to which you can borrow money from these lenders. This limit is known as the credit limit. Two main factors influence an individual’s credit limit, namely credit history and credit rating.
Credit history or credit report shows you the repayment track record for all the past credit borrowings and the pattern in which they were repaid. Credit rating or score is the number that evaluates the overall pattern of your credit history.
These factors determine the amount of credit limit one can avail from the lenders. If you have a good repayment track record, which reflects in your credit score, the credit limit eligible will be higher due to lower risks attached with lending to you. To ensure you have a good credit score, its important to keep track of all bank accounts and credit borrowed. It is critical to meet repayment due dates to ensure a good track record. A tab needs to be kept in the spending limit in the case of credit cards and it could help to keep a careful note of all the expenditure. A careful spender will enjoy better credit limits and enjoys the status of a responsible borrower, to whom lenders will willingly engage in loan transactions.
