What is a credit limit? How it works and how to increase yours
- What is a credit limit?
- How does a credit limit work?
- How is a credit card limit determined? 4 key factors
- Do credit limits affect credit scores?
- How can I increase my business credit card limit?
- Access higher credit limits based on your revenue with a Ramp Business Credit Card
A credit limit is the maximum amount you can borrow on a credit card or line of credit. Your lender sets this cap, which defines your spending power and influences your credit score.
Understanding how limits are determined and how to manage them helps you avoid fees, protect your score, and qualify for higher limits when your business needs more flexibility.
What is a credit limit?
A credit limit is the maximum amount of money a lender allows you to borrow on a credit card or line of credit.
Your lender sets this amount in your agreement, and it can change over time based on your financial profile and payment history. A high credit limit lets you spend more, but it can also make it easier to overspend and accumulate debt.
Lenders use credit limits to manage risk by balancing your access to credit with your ability to repay. Knowing your limit—and staying comfortably under it—helps you protect your credit score and keep borrowing costs low.
Why does a credit limit matter?
Your credit limit matters because it shapes both your borrowing power and your credit score. It directly influences your credit utilization ratio, which is the share of your available credit you’re using.
Keeping utilization below 30%, and ideally in the single digits, signals responsible borrowing. Lower usage can protect your score and improve your chances of qualifying for higher limits and better terms.
Discover Ramp's corporate card for modern finance
How does a credit limit work?
A credit limit sets the maximum you can spend before you must pay down your balance. Each purchase reduces your available credit, and each payment restores it. If you reach your limit, your issuer will usually decline new charges unless you’ve opted in to over-limit coverage.
Credit limit vs. available credit
Term | What it means | Why it matters |
|---|---|---|
Credit limit | The maximum your issuer allows you to borrow | Defines your overall spending cap |
Available credit | Your limit minus your current balance | Shows how much you can still spend |
What happens if you go over your limit?
Your issuer may decline the transaction or approve it and charge a fee if you’ve opted in to over-limit coverage. Rules vary by issuer.
Can you use your full credit limit?
Yes, but it’s rarely a good idea. Running your balance close to the limit increases utilization, which can hurt your score and trigger additional fees.
How is a credit card limit determined? 4 key factors
Your issuer sets your credit limit during the approval process. For secured credit cards, the limit often matches the value of your collateral, like the deposit you put down. With unsecured cards, issuers rely more on your personal credit score, business income, and overall financial profile.
Some providers also assign ranges based on card type. For example, a starter card may cap you at a few thousand dollars, while a premium business card can reach tens of thousands or more. In general, stronger revenue and a positive credit history support higher limits, while limits based solely on personal credit scores tend to be lower.
1. Payment history
On-time, in-full payments show you can manage credit responsibly. Missed payments or frequent over-limit charges can lead to lower limits.
2. Total debt
Issuers look at how much you already owe across loans and credit lines. High outstanding balances reduce your capacity to take on new credit.
3. Debt-to-income ratio
DTI measures monthly debt payments against gross monthly income. A lower ratio suggests you can handle more credit; most issuers prefer DTI well under 50%.
4. Credit utilization ratio
Utilization compares your balances to total credit limits. Lower utilization supports stronger credit scores and makes higher limits more likely.
For example, if you have $2,000 in credit card debt and a total credit limit of $10,000, your credit utilization rate would be 20%. A lower credit utilization ratio demonstrates responsible credit use and will boost your credit score, leading to higher limits.
Build credit with an EIN
Getting a business credit card using your EIN number helps build your business credit. A strong score can lead to more favorable loan terms and repayment options.
Do credit limits affect credit scores?
Yes. Your business credit score and credit limit are closely connected. Your score is calculated based on factors like your payment history, late payments, total revenue, and debt-to-income ratio.
Consistently paying on time and keeping utilization low can improve your score and help you qualify for higher limits with better rates. Missed or late payments, on the other hand, can drag your score down and cause issuers to lower your limits.
How can I increase my business credit card limit?
The best way to qualify for a higher credit limit is to show responsible use and steady income. These steps can help:
- Pay on time to prove reliability
- Keep utilization low—below 30%, ideally in single digits
- Update your issuer if income or revenue rises
- Build business credit with an EIN-based card and clean payment history
- Limit new applications to avoid too many hard inquiries
- Request an increase after 6–12 months of strong account activity
Does increasing your credit limit affect your credit score?
Raising your credit limit can affect your score in different ways. In the short term, your lender may perform a hard inquiry, which can cause a small dip. Over time, though, having a higher limit combined with consistent on-time payments and low credit utilization can help improve your credit score.
Access higher credit limits based on your revenue with a Ramp Business Credit Card
As a startup, traditional lenders may not approve you for a loan because your revenue is too low or your company hasn’t been in business long enough. But if you have ecommerce sales revenue coming in, Ramp’s sales-based underwriting can help you out.
The Ramp Business Credit Card can offer a credit limit up to 30 times higher than other business credit cards on the market. We leverage data from leading platforms like Stripe, Shopify, and Amazon to underwrite credit limits for businesses using their commerce sales data. To qualify, all you need is one year of sales data.
With Ramp, you get more than just a higher credit limit. Control spending with preset rules, track expenses in real time, and save money with built-in rewards and over $350,000 in partner discounts. Unlimited physical and virtual cards give your team flexibility, and global Visa acceptance makes it easy to pay anywhere your business operates.
Get started with a free interactive product tour.
“Ramp is the only vendor that can service all of our employees across the globe in one unified system. They handle multiple currencies seamlessly, integrate with all of our accounting systems, and thanks to their customizable card and policy controls, we're compliant worldwide.” ”
Brandon Zell
Chief Accounting Officer, Notion
“When our teams need something, they usually need it right away. The more time we can save doing all those tedious tasks, the more time we can dedicate to supporting our student-athletes.”
Sarah Harris
Secretary, The University of Tennessee Athletics Foundation, Inc.
“Ramp had everything we were looking for, and even things we weren't looking for. The policy aspects, that's something I never even dreamed of that a purchasing card program could handle.”
Doug Volesky
Director of Finance, City of Mount Vernon
“Switching from Brex to Ramp wasn’t just a platform swap—it was a strategic upgrade that aligned with our mission to be agile, efficient, and financially savvy.”
Lily Liu
CEO, Piñata
“With Ramp, everything lives in one place. You can click into a vendor and see every transaction, invoice, and contract. That didn’t exist in Zip. It’s made approvals much faster because decision-makers aren’t chasing down information—they have it all at their fingertips.”
Ryan Williams
Manager, Contract and Vendor Management, Advisor360°
“The ability to create flexible parameters, such as allowing bookings up to 25% above market rate, has been really good for us. Plus, having all the information within the same platform is really valuable.”
Caroline Hill
Assistant Controller, Sana Benefits
“More vendors are allowing for discounts now, because they’re seeing the quick payment. That started with Ramp—getting everyone paid on time. We’ll get a 1-2% discount for paying early. That doesn’t sound like a lot, but when you’re dealing with hundreds of millions of dollars, it does add up.”
James Hardy
CFO, SAM Construction Group
“We’ve simplified our workflows while improving accuracy, and we are faster in closing with the help of automation. We could not have achieved this without the solutions Ramp brought to the table.”
Kaustubh Khandelwal
VP of Finance, Poshmark
