Credit limit: Difference between revisions
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A line of credit that has reached or exceeded its limit is said to be '''maxed out'''. While the line of credit is maxed out, it cannot be used for any further activity unless the consumer pays off at least some of the debt to enable it to fall below the limit, the creditor agrees to extend the limit, or the creditor allows one or more additional purchases with the charging of an over-the-limit fee. |
A line of credit that has reached or exceeded its limit is said to be '''maxed out'''. While the line of credit is maxed out, it cannot be used for any further activity unless the consumer pays off at least some of the debt to enable it to fall below the limit, the creditor agrees to extend the limit, or the creditor allows one or more additional purchases with the charging of an over-the-limit fee. |
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Reducing credit limits on credit cards can have positive impact if you are able to maintain a credit utilization rate under 30%. The benefit occurs when trying to apply for new lines of credit. A lender will look at the totals of all open lines of credit and determine the risk of establishing a new line of credit DJ Clemons! |
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{{Credit cards}} |
{{Credit cards}} |
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Revision as of 13:48, 22 August 2019
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A credit limit is the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit (sometimes called a credit line, line of credit, or a tradeline).
This limit is based on a variety of factors ranging from an individual's ability to make interest payments, an organization's cashflow or ability to repay the credit card debt and is an obligation of the consumer to pay just like all other parts of the balance.
A line of credit that has reached or exceeded its limit is said to be maxed out. While the line of credit is maxed out, it cannot be used for any further activity unless the consumer pays off at least some of the debt to enable it to fall below the limit, the creditor agrees to extend the limit, or the creditor allows one or more additional purchases with the charging of an over-the-limit fee.