Do you need money to complete a project? Do you know your credit limit, the maximum amount you can borrow? How to calculate this limit? Our explanations.

## What is the credit limit?

We talk about a credit limit to illustrate the maximum amount that can be borrowed by an individual when applying for credit. This limit is automatically calculated by the banks when submitting your file. Two cases then arise:

- Calculate your credit limit

If the precise calculation method differs from one establishment to another, the principle remains the same. Thus, the credit limit corresponding to the maximum amount repayable in three years. To calculate the credit limit, the financial institution does the following:

- Calculation of the gross budget : total of your income minus total of your compulsory expenses (insurance, rent, etc.).
- Calculation of the budget surplus : in the gross budget, it is then necessary to remove the “current” expenses (taxes, food, children,…).
- Calculation of the limit : the limit then corresponds to the maximum amount of a credit over three years that you could repay according to your surplus.

In a simplified way, once the monthly margin has been defined, it can be multiplied by a factor of around 30 to obtain the credit limit. In the case of a credit repurchase, the credit limit then corresponds to the total of the debts to be redeemed, plus a possible additional credit.

## An example

You have an income of 5,000 USD per month. After deducting the compulsory expenses, you have 2,500 USD. From these 2,500, another 1,500 USD is taken, corresponding to the current cost of living, to obtain a budget surplus of 1,000 USD monthly. To estimate your credit limit, simply multiply this excess by 30. You could then borrow a maximum of 30,000 USD.

## Get your exact limit

To obtain a more precise credit limit, it is best to call on a specialized advisor. The latter will be able to study your budget in detail exhaustively to offer you a more precise estimate of your limit. In case of interest, it will then be possible to make a non-binding request to obtain your actual limit. In this case, do not forget to declare all your sources of income (and those of your spouse). Not only will you get a higher credit limit, but you will also benefit from better credit terms.