Why Are Credit Limits So High in Washington, DC?

Making a lot of money doesn’t necessarily mean you’ll have a high credit limit, but it helps.

Looking at the average credit limit per credit card account in each state, those with higher median incomes tend to have higher average credit limits. Account holders in the District of Columbia have the highest average credit limit in the U.S. ($8,877), and the median household income is among the 10 highest nationwide, according to the most recent estimates (2012) from the U.S. Census Bureau. That credit limit of $8,877 is more than $200 greater than the next highest average limit (Colorado) and more than $1,000 greater than the national average, according to 2013 third-quarter data from the Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool.

A large amount of available credit can be great for credit scores, but it can also lead to spending more than you can afford, which is a bad thing all around. Credit scores are used to help lenders determine whether or not you are likely to repay your debts, and those lenders like seeing a low debt-to-credit ratio, also known as a credit utilization rate.

That’s why high credit limits can be so helpful. It’s much easier to keep your credit utilization low when you have a lot to use. Of course, that’s the same reason it’s easy to overspend. You can get an idea of how your debt usage impacts your credit scores by using a free tool like Credit.com’s Credit Report Card, which also gives you a letter grade on five components of your credit history, including debt usage, and how they impact your credit scores.

Considering that you have to state your income on credit card applications, it makes sense that larger incomes translate into higher credit limits, but it has a lot to do with credit history, too. For instance, you may not get approved for a high credit limit right away, but establishing good payment history could help you get an increase, even if your income doesn’t change.

Credit Limits by State

While income seems to have a relationship to credit limits — seven of the states with the 10 highest credit limits also have top 10 median incomes — it’s not a direct correlation. Colorado, with the second-highest average limit per credit card of $8,668, has an above-average median income, but it’s not one of the 10 greatest in the U.S. Compare that to the state with the highest median income (Maryland, $71,122), which has the 11th highest average credit limit.

On the other end of the spectrum, seven of the states with the 10 lowest average credit limits are also among the bottom 10 median incomes. Mississippi is No. 51 in both categories with an average credit limit of $6,702 in the third quarter and a median income of $37,095. The 2012 estimate for the national median household income is $51,371.

Note: Because we’re showing Q3 2013 average credit limits alongside 2012 median incomes (which is the most recent data available), this is not an apples-to-apples comparison, and intended to give general context.