Credit Card Companies Lower Limits

Just read an article where it stated that more and more credit card companies are either lowering credit limits or closing cards.

I mentioned in this is an earlier post regarding credit scores.

By closing credit cards it is hurting them in two ways. One, it the ability to have available credit when needed. The second, is that it can lower your credit score.

The reason it can lower your credit score is that part of the your score is tied to amount owed on credit cards. For instance if you had a credit limit of $10,000 with a balance of $3,000 this probably would help a score. Now if your limit was lowered to $4,000 it can hurt your score since you don't have as much available credit.

In my book I discuss this in more detail.

All major credit cards were starting to implement even without you the consumer aware they are closing or lowering your limits. They are supposed to notify you by mail within 30 days, but sometimes that doesn't happen. In addition, if you receive a letter you may not pay any attention to the letter.

Just attempting to make you aware of this change.

LESSON: Credit card companies are more in control of your card than you. At any point they can lower your limits even if you always paid on time.