Credit
Credit Limit
pronounced: [C-r-e-d-i-t- -L-i-m-i-t]
The maximum amount a credit card company or lender will extend to a cardholder.
It is determined based on income, credit score, and repayment history. Exceeding the limit incurs penalty fees.
Example
Ravi applies for a home loan. His CIBIL score is 720 — considered "fair". With a score above 750, he would get a loan at 8.5% p.a. Instead, the bank offers 9% p.a. A 20-year ₹50 lakh loan at 9% costs ₹44,986/month vs ₹40,680/month at 8.5% — ₹4,306 more every month.
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Last updated: 21 May 2026