How do credit card companies decide the credit limit of a newly issued card?

Question

If someone is applies for a new credit card and gets approved, the credit card company will start them with a given credit limit. What is this limit based on? Is there a way to negotiate a higher initial limit with a company before you apply?

Answer 1

Different credit card issuers have different criteria for calculating the credit limit to be granted to an individual applicant. But there are a few common elements that help the banks decide the credit limit.

Most companies check your credit reports and gross annual income level to determine your credit limit. Credit card companies determine your credit limit through a process called underwriting, which varies from company to company but, generally includes computing factors such as your credit score, history of credit card performance, and income level.