Effect of Credit Card Holders’ Age on the Credit Limit

Abstract

Credit Limit of the credit cards is one of the affecting factors influencing people’s credit scores, playing a great role in determining their ability of paying debts and could be involved in banks evaluation in mortgage. In order to help people better assess their credit scores quantitatively and be aware of the influencing factors that determine their specific credit limits, this paper analyzed 10127 bank customers’ data. Based on the estimation, the evaluation is presented according to the information given to obtain the formula used to evaluate people’s Credit Limit and its relationship with some influencing factors, e.g., age, gender, education and marital status, and education level. According to the analysis from STATA, it is shown that per unit age increase would increase the credit limit by 1.76 percentage. In addition, impacts of other variables (e.g., gender, education level, marital status, income level, card type, card utilization ratio) are also found. The model presented could be used to help evaluating a persons’ Credit Limit according to the data provided. Overall, these results shed light on guiding further exploration of credit limit designs.