Forgetting To Tell Consumers About Credit Card Limit Drops
Posted at by ifydcat on category CreditConsumers are designed to be protected better with the credit card rules being put into place on Aug. 22. Banks and credit card companies are raising interest rates and fees and slashing credit limits within the run-up to the new credit card rules. Many of the time when the economy is down so far, credit limits are cut like this. Credit scores are hurt for anybody who has this limit changed. But you will find steps credit card users can take if they want to preserve their current credit limits, or even boost their credit limits.
Dropping credit card limits
Credit card companies have been cracking down on cardholders during the recession and its aftermath. Many credit card-issuing banks are trying to rein in risk amid rising delinquencies and charge-offs — and before the final round of new credit card rules goes into effect. According to Bankrate.com, even those with good credit scores are having issues with dropping credit card limits. Dennis C. Moroney, research director of bank cards at TowerGroup, told Bankrate that credit card companies are reducing credit lines and closing accounts. He said that even individuals with higher scores that have been cut down from 750 to 720 are having trouble getting credit.
Credit scores drop with credit limit
More than 60 million cardholders have had their credit limit slashed over the past few years. Credit Card Guide reports that many individuals hit by credit limit cuts haven’t committed any of the typical “risk triggers” banks use to assess credit worthiness, such as regular late payments or high credit card balances. It isn’t just inconvenient to have your credit card limit cut. It also hurts many credit scores of cardholders who have had outstanding balances on their cards. With the debt-to-credit ratio weighing in second among one of the most significant factors contributing to credit scores, credit line cuts are no small concern.
How to protect your credit card limits
Eva Norlyk Smith at Credit Card Guide has some tips to help anybody who would like to increase or keep the same their credit limits. Calling and asking is the first thing to do. Most credit card accounts are eligible for credit limit increases once a year. Every month, make paying down the balances a priority. And use the credit card a lot, but don’t exceed 50 percent of the credit line. Make sure you pay all of it off on time. Don’t cancel any credit cards, don’t apply for any new credit cards and never ask a credit card company to pull your credit report. A credit check hurts a credit score as much as applying for a new credit card.
Bankrate
bankrate.com/finance/credit-cards/credit-card-issuers-slash-credit-limits-1.aspx
Credit Card guide
creditcardguide.com/creditcards/credit-card-tips/higher-credit-limit-6-dos-donts-342/