How to Prevent Your Credit Limit From Being Reduced

Ask Carolyn Warren

When your credit card limit is reduced, it might lower your credit score for two reasons:

  1. Your balance-to-limit ratio is reduced.
  2. Your overall credit usage-to-available-credit ratio is reduced.

“Can They Do That?”

Creditors have the right to reduce your limit. This can happen with a credit card and with a Home Equity Line of Credit (HELOC).

Three Reasons Why Your Limit May Get Reduced

  1. When a creditor sees that you have several credit cards maxed out, they get nervous. They think you are using credit cards to live off of and are getting into financial trouble. So to minimize their risk (and possible loss), they will reduce your limit asap before you borrow even more.
  2. If you pay late on one card (or worse, on several cards), a different creditor will see that by monitoring your credit. They fear you will also pay them late and quickly lower your limit…

View original post 178 more words

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s