Definition of Credit limit:
Credit limits are the maximum amount of money a lender will allow a consumer to spend using a credit card or revolving line of credit. The limits are determined by banks, alternative lenders, and credit card companies and are based on several pieces of information related to the borrower. These lenders examine the borrower's credit rating, personal income, loan repayment history, and other factors.
The term credit limit refers to the maximum amount of credit a financial institution extends to a client. A lending institution extends a credit limit on a credit card or a line of credit. Lenders usually set credit limits based on the information given by the credit-seeking applicant. A credit limit is a factor that affects consumers' credit scores and can impact their ability to obtain credit in the future.
Maximum amount of money a borrower can charge on, or withdraw from, a particular credit account.
How to use Credit limit in a sentence?
- A lender generally gives high-risk borrowers lower credit limits because they lack capital and the ability to repay the debt. Low-risk debtors typically receive higher credit limits giving them greater flexibility when they spend.
- The commercial entity had a large credit limit it finally decided to use when it came time to leverage the business.
- I didnt know if I could buy the new car with my credit card, because it might cause me to exceed my credit limit .
- If you want to be able to have all the borrowing power you need in the future you must pay back your loans to get a high credit limit .
- The term credit limit refers to the maximum amount of credit a financial institution extends to a client.
- Lenders usually set credit limits based on a consumer's credit report.
Meaning of Credit limit & Credit limit Definition