Hello, everyone in welcome back to a new video. Now I get this question all the time. How is my credit-card limit determined and, more importantly, how do I increase my credit card limit and for those you who don't know, every person's credit card limit is different and every cards credit card limit is usually different. For example, I'm a huge fan of the 5 % cash back Amazon rewards credit card.

However, a buddy and I both apply through the same day. I got a ten thousand dollar card limit. He got a five thousand card limit and I'm gon na tell you why in a second okay, so first off, as many of you know by now, I work in the residential mortgage industry in Arizona. So the importance of that is, I pretty much see a new credit report almost every single day now, so I've seen a lot of credit reports and I get this question all the time reason being is because the higher your credit limit is it's typically a lot Easier to raise your scores that way, I'm not going to get into it in this video on how to actually raise your credit scores.

I've made lots of great videos I'll leave them linked down below. So, if you're looking to raise your credit score check, the links down below I've made some great videos on that, but ok, credit limit. So, as I just mentioned, the higher your credit limit is usually the healthier your credit score. Actually is so the two main factors in determining your credit limit are your annual gross income and your actual credit scores.

I want to dive into each of these in some pretty good depth in just a second, but first of all check out this really sweet graph. That I found on Google, this is from Credit Karma who's like one of the leading companies in credit. So if you haven't heard of them, I'd be shocked, but essentially they did some crazy, in-depth research to gather this data. As you can see, credit score is slightly more important than your gross annual income.

You can be making like a hundred and fifty thousand dollars a year, but if you still got a six, fifty credit score you're only going to get like a five thousand dollar credit limit versus you, making only twenty five thousand dollars a year. But with the 775 credit score, you're going to get like a ten thousand dollar credit limit, that's crazy! To me I mean you can get a credit limit of ten thousand dollars a month where you only make $ 2,000 a month. I mean that's absolutely unreal me, but that just proves how important it is to have a high credit score. Credit companies want to see a proven track-record of credit before they actually go out and give you a bunch of money.

Okay, but let's break down credit first. Essentially, credit card companies look at your annual gross income, essentially how much you make a year when determining how much they should give you each month to spend, because at the end of the day, the the credit card company wants to get their money back. For example, if you only make $ 10,000 a year if they were to give you a $ 5,000 spending limit every single month and you use that $ 5,000 spending, the credit our company is never going to be getting their money back. Never now here's a cool trick, slash tip for you that I don't see a lot of people talk about is the fact that income is self-reported.

So I'm not saying go out and completely lie about your income. If you only make $ 40,000 a year, don't go apply for a credit card and say hey. I make a hundred and fifty thousand dollars a year. Let me get a great credit card limit.

No there's a reason. You get a credit limit. Credit lenders want to see the money they lend you back in their pocket sure they want you to rack up a little bit of debt, but at the end of the day they want you to be successful, because that means more money back in their pocket. For example, if you went way overboard and just went bankrupt and just can't pay that money back those credit lenders are not getting their money back versus, you know if you rack up a little bit of dead and you're paying interest on it.

But you know you you're, paying it off. The credit lender is going to be way more interested in lending you money versus someone with a crazy high limit who just can't pay anything back. So ultimately, the credit lender is trying to put you in a position to succeed. So going back to my point on the fact that income is self-reported, let's say you make 40k a year and you go apply for a card and you put down the fact that you make 45 K year, you're still in a pretty good position to succeed.

Yet you get a slightly higher credit limit. This, in turn will ultimately keep your credit utilization a little bit lower, which again, if you've seen those videos, I'm talking about link below you'll, know why that's so important, plus most people lie about their income anyways. I work in the mortgage industry. Believe me, I see it every single day, but again, I'm not telling you to absolutely lie about your income.

Well, there's a cool trick for you and another thing: if you get a raise at work, remember your income is self-reported. So if you get a raise, you need to actually tell your credit company, so they can give you a raise in your credit limit right. You can't just expect them to automatically know you got a raise and then increase your credit limit. You either actually go and tell them so they can increase it for you, but that's annual gross income.

In a nutshell, now, let's talk a little bit about credit score, as I mentioned, a slightly better credit score in comparison to annual income is a little bit more important and honestly, a higher credit score is just a lot easier for a lot of things in life. Your credit score says a lot about someone biggest thing to understand, though, when it comes to credit scores is credit utilization. I cannot stress this enough, I'm always talking about this. I talked about it in the three videos talking about down below check those links.

Again, I don't want to dive too much depth into it, but credit utilization is so dang important. So do something for me: take all the credit cards that you have right now and add up all of their limits. So let's say you've got one card. That's got $ 1,000 limit, another one's got a $ 2,500 limit and another one's got a $ 1,500 limit.

So in total out of those three cards you have $ 5,000 worth of credit every single month. You should never be spending more than 1500 to maybe $ 1600 a month. You want to keep your total credit utilization at about 30 % or lower. I don't recommend ever going above that, unless you absolutely have to - and it's super important to stay conscious on what card you're putting that money on you don't want to spend a thousand dollars on the thousand dollar limit card and five bucks on the 2500 limit card.

You want to keep them all at about 30 %, so in total that adds up to about 1500 bucks a month. This is a huge trick. Believe me in increasing your credit score, keeping that credit utilization at 30 % will do wonders to your score. I cannot stress this enough and, if you're sitting there so confused description, click now, but there's your best ways for increasing your credit limit.

Those are really the only two factors that get determined when actually figuring out what your limit should be. I highly recommend you just focus on increasing your credit score and then also you know if you can get a raise, that work more power to you. A lot of people get it wrong when it comes to credit. So hopefully you learned something new.

I'm trying to help out as many people as possible credit is always just this mysterious thing that not many people know about so again. Hopefully, you'll learn something new. Also, if you're new around here consider clicking that subscribe button, I'm always releasing some really awesome content and if you ever have a question about you know: video creation, YouTube finance real estate, anything really drop me a line down below and I'd love to create some more Content to help you out, but again Sean's the name. Hopefully you enjoyed the video.

More importantly, they'll. Hopefully you learn something new good luck with increasing that credit limit and I'll see you very soon.