Your "credit limit" is a key feature of your Exa account that directly determines how much you can borrow. It’s designed to be a transparent and dynamic reflection of your financial standing within the Exa ecosystem. This guide breaks down exactly what it is, how it works, and how you can manage it.
What is the Exa credit limit?
Think of your Exa credit limit as your total available borrowing power. It's the maximum amount of funds you can borrow across Exa Loans and the Exa Card.
Unlike a traditional credit score, our credit limit isn't based on your past borrowing history with external banks or credit reporting agencies. Instead, it is calculated dynamically based on the assets you hold with us and your current financial activities on the Exa platform.
How Does My Credit Limit Work?
Your credit limit directly impacts the "amount" you select when taking out a new loan. When you go through the loan application process, the system will prevent you from borrowing an amount that exceeds your available limit.
Your limit is not static; it can change over time based on four core factors.
What Affects My Credit Limit?
Your Exa credit limit is influenced by a combination of your assets and your liabilities within our platform. Understanding these factors is key to managing your borrowing power.
1. Your Available Collateral
This is the most significant factor. The more assets you hold in your Exa account, the higher your potential credit limit will be. We apply a Loan-to-Value (LTV) ratio to your collateral, which means your credit limit is a specific percentage of the total value of your eligible assets. This helps ensure your loan is securely backed.
Example: If you have $10,000 worth of assets eligible for collateral, and the LTV is 70%, your credit limit from this collateral would be $7,000.
2. Your Ongoing Loans
Any outstanding loan balance you have with Exa will reduce your available credit limit. As you repay your loans, the portion of your credit limit that was being used becomes available again.
Example: Continuing from above, if your total credit limit is $7,000 and you take out a loan for $2,000, your remaining available credit limit will be $5,000. If you then repay $500 of that loan, your available limit will increase to $5,500.
3. Your Credit Card Purchases
If you have an Exa-linked credit card, your recent purchases can also impact your credit limit. This is to ensure a holistic view of your financial activity on our platform and to promote responsible borrowing. This part of the calculation helps protect you from becoming over-leveraged.
4. The asset you want to borrow
When using your Exa card, the loans are always taken in USDC, but as you can validate in the Exa App, the loans feature allows you to take borrows in every token permitted in the Exactly Protocol. The asset you select for a loan will impact the credit limit. To understand how, please check our Whitepaper.
How Can I See My Available Credit Limit?
In the Loans section, you can see your available credit limit for a USDC loan. Consider that this number may change if you take a loan for other assets.
How to Increase Your Credit Limit
If you wish to increase your borrowing power, you can:
Add more assets to your Exa account to serve as collateral.
Pay down your existing loan balances to free up your available credit.
By understanding the factors that shape your Exa credit limit, you can effectively manage your borrowing capacity and make informed financial decisions that align with your goals.