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How Much Available Credit Should I Have?

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Brittney Myers
Author: Brittney Myers
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Brittney started her writing career in the world of science, putting her physics degree to good use. Her journey into finance started with building her personal credit, but soon grew into a borderline obsession with credit cards and travel rewards. For the last 7 years, she has enjoyed the ability to share her expertise with readers, as well as the opportunity to interview companies and individuals making an impact on our financial lives. She wholly believe most problems can be solved with the right research -- and a good spreadsheet -- and she specializes in translating complex financial topics into actionable advice to help educate and empower readers.

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Cole Tretheway
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Cole Tretheway

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One little-known fact about credit-scoring agencies (like FICO) is they don't care about how much debt you have in dollars. You could be $1 or $10,000 in debt and still boast a good credit score. That's because a FICO® Score measures only your credit utilization ratio.

Your credit utilization ratio is how much of your available credit you're using. Ideally, it's no more than 30%. Use too much credit, and you'll find yourself with a lower credit score. But you should use at least a little credit, enough to prove you can borrow responsibly.

It's actually super simple to calculate how much available credit you need. Read on for an easy formula and two ways to increase your credit limit.

How much available credit do you need?

To find out how much available credit you need, add up with how much credit you'd like to use each month. Multiply that number by 10. That's how much available credit you need in dollars.

Example: Say I'm a new credit user. I want to start my credit journey by spending only $100 each month with my secured credit card. 100 x 10 = 1,000. To keep my credit utilization at 10% and establish my credit, I should have at least $1,000 in available credit.

Unsure how much credit you want to spend monthly? If you're a credit card beginner, start small. If you're an experienced user, check the last 12 months of statements. How much are you typically spending? Multiply that number by 10 to get your ideal credit limit.

TIP

Should you be maxing out your credit card?

Try to avoid maxing out your credit card. Doing so could hurt your credit score. Plus, some lenders may see that as a black mark on your record and refuse to offer you low rates. If you're maxing out your card often, you could benefit from swiping less and raising your credit limit.

There are many factors that go into your credit score. For example, paying your bills on time is more important than your credit utilization ratio. But credit utilization is the second biggest factor that affects your credit score. You can boost your score by increasing your credit limits.

Credit card comparison

We recommend comparing options to ensure the card you're selecting is the best fit for you. To make your search easier, here's a short list of standout credit cards.

Offer Our Rating Welcome Offer Rewards Program APR Learn More
Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Best for cash back on rotating categories 		Discover will match all the cash back you’ve earned at the end of your first year. 1% - 5% Cashback Circle with letter I in it. Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases.

Intro:

Purchases: 0%, 15 months

Balance Transfers: 0%, 15 months

Regular: 18.49% - 27.49% Variable APR *Rates as of December 12, 2024.

Apply Now for Discover it® Cash Back

On Discover's Secure Website.

Rates & Fees External Link Icon

Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Best for cash rewards on everyday spending 		$200 cash rewards Circle with letter I in it. Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months. 2% cash rewards Circle with letter I in it. Earn unlimited 2% cash rewards on purchases.

Intro: Circle with letter I in it. 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers

Purchases: 0% intro APR, 12 months from account opening

Balance Transfers: 0% intro APR, 12 months from account opening on qualifying balance transfers

Regular: 19.24%, 24.24%, or 29.24% Variable APR

Apply Now for Wells Fargo Active Cash® Card

On Wells Fargo's Secure Website.

Rates & Fees External Link Icon

Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Best for unlimited rewards on purchases 		25,000 points Circle with letter I in it. 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases 1.5 points per dollar Circle with letter I in it. Earn unlimited 1.5 points per $1 spent on all purchases, with no annual fee and no foreign transaction fees, and your points don't expire as long as your account remains open.

Intro: Circle with letter I in it. 0% Intro APR for 15 billing cycles for purchases. 0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days. After the intro APR offer ends, 18.49% - 28.49% Variable APR on purchases and balance transfers will apply. A 3% fee for 60 days from account opening, then 4% fee applies to all balance transfers.

Purchases: 0% Intro APR for 15 billing cycles for purchases

Balance Transfers: 0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days

Regular: 18.49% - 28.49% (Variable)

Apply Now for Bank of America® Travel Rewards credit card

On Bank of America's Secure Website.

Two ways to increase your credit limits

If you find that you're using a lot more than 30% of your available credit regularly, consider increasing your credit limits. You can do this in one of two ways:

  1. Ask for a credit limit increase on your existing cards. You can typically request an increase through your online account. You may also contact your credit issuer by reaching out to a representative via phone or email. (Note: Some credit card companies will perform a hard credit inquiry while processing your request.)
  2. Open a new credit card account. The credit limit of the new account will be added to your total available credit. Opening a new credit account will probably lower your credit score in the short term, because doing so lowers the average age of your accounts.

Boosting your credit limits will shrink your utilization rate, which is good for your credit score. However, that's only true if your spending remains constant. If you spend more, your utilization rate will get worse no matter what your credit limits are.

One easy way to keep your utilization rate down

Let's say you're planning to borrow a large amount of money soon. Maybe you're taking out a mortgage, or maybe you're getting an auto loan to pay for a used car. Whatever the case, you want your credit score in top condition to get the best rates possible and pay less money.

To keep your utilization rate down -- therefore boosting your credit score -- you can pay off your credit card balance in small chunks throughout the month. That way, you will never be at risk of having your lender report to credit bureaus that your credit utilization is too high.

Example: You have a $2,000 credit card limit and usually spend $1,000 a month. This shows as using 50% of your credit, which can lower your credit score. To improve this, you start paying off the card every time you owe $250. Now, the most you owe at any time is $250, making your credit usage only 12.5%. This is great for your credit score.

Can your credit limit be too high?

Yes, if it tempts you to overspend by maxing out your card. In that case, try tracking your spending with a budgeting app. That way, you know exactly how much that last-minute purchase at your favorite store is costing you. Measuring harmful habits is the first step to changing them; once you know, you can plan.

So long as it doesn't change your spending habits too much, having a high credit limit is good for your finances. It makes it easier to spend more on credit, earn credit card rewards, and maintain a high credit score. For best results, keep credit utilization in the 5% to 10% range.

FAQs

  • Having $20,000 in available credit is good if you use no more than $6,000 of that limit. It's best to keep your usage to $2,000 or less at any one time. That way, you keep your credit utilization ratio below 10%, which is great for your credit score.

  • Only if you repeatedly request credit limit increases. Lenders may perform hard credit inquiries while processing your requests, which typically lower your credit score.