The average credit limit for Americans can vary more than you think, and this is especially true when you separate the population by age. Note that the average credit limit tends to be higher for consumers with high incomes and great credit, but other factors like your current credit usage may also play a role.
What is considered a “normal” credit limit for most Americans? Recent Experian Data suggests that the average American consumer has access to $ 31,015 in credit limits on all of their credit cards. Meanwhile, the average credit card balance was only $ 6,194 nationally at last count, and across all age groups.
If you’re curious about how your credit score and age might play a role in increasing your credit limits, read on to find out more.
Average U.S. Credit Limits by Credit Score and Age Group
More recent Experian data shows how a longer credit history generally leads to a higher credit score and higher credit limits. Here’s how Experian breaks down average credit limit data by generation, along with the average credit score of consumers in different age groups:
|Generation Z (18 to 22 years old)
|Millennials (23 to 38)
|Generation X (39 to 54 years old)
|Baby boomers (55 to 73 years old)
|Silent Generation (74 years and over)
The fact that older generations tend to have higher credit scores and higher credit limits really makes a lot of sense. After all, a major factor that accounts for 15% of your FICO score is the length of your credit history, which is an area in which older generations tend to shine. Older generations may also have had time to develop better payment habits, which is crucial because payment history, at 35 percent, is the most important component that makes up FICO scores.
How do issuers decide credit limits?
When you apply for a credit card, the card issuer (i.e. Chase, Discover, Capital One, etc.) decides whether you are sufficiently creditworthy to qualify and, if so, how much. money you can borrow. This amount is known as your credit limit, and each card issuer looks at the same basic factors to assign this number.
One of the most important factors that credit card issuers look at in determining your credit limit is your payment history so far. This factor makes up the highest percentage of your FICO score, and credit card issuers are more likely to give you more access to credit if your payment history is flawless.
Use of credit
Your credit usage is a number that represents the amount of money you owe against your credit limit. Credit card issuers will look at your total usage rate as well as your usage rate on all of your revolving lines of credit. Generally speaking, experts suggest keeping your credit usage below 30% for the best results, which would mean having balances of $ 3,000 or less for every $ 10,000 of available credit you have.
Length of credit history
Credit card issuers also consider the average length of your credit history. A longer credit history with many responsible credit use cases is seen as a huge benefit in the eyes of lenders.
Personal income and monthly expenses
Credit card issuers will also look at how much money you earn, which makes sense since you will be using your income to pay off purchases you make on your credit card. Your monthly expenses will also be taken into account since your bills eat up a certain amount of your income each month.
Finally, credit card issuers review recent inquiries on your credit report to determine whether or not to offer you credit, and the amount. Lenders may take recent inquiries as a sign that you are an at-risk borrower, and you may be refused a line of credit or offered a lower credit limit.
Is a low credit limit bad?
A low credit limit doesn’t have to be “bad,” but there are a few things to keep in mind if you have a low credit limit on one or more credit cards. First, having a low credit limit makes it easy to show a high level of credit usage. After all, charging $ 500 on a credit card with a $ 1,000 limit would leave you with a 50% usage rate on that card, even though you owe a relatively small amount of money.
A low credit limit can also make it difficult to pay on credit for large purchases, such as furniture or vacations.
How can I increase my credit limit?
If you want to increase your credit limit, you may be able to increase it immediately by simply calling your credit card issuer using the number on the back of your card and asking them. Depending on your card issuer, you may also be able to request a credit limit increase using your online account management page.
Note that when you request a credit limit increase, your card issuer may conduct a thorough investigation of your credit report to determine your eligibility. It’s not the end of the world, but it’s worth considering if you’d rather wait to see if your credit card issuer automatically increases your credit limit over time.