Consumers are intended to be protected better with the credit card rules being put into place on Aug. 22. To make these new rules possible, banks and credit card companies are working to cut credit limits, rates and fees on all their cards. Since the economy is so bad right now, it makes sense that credit limits would be cut. Despite the fact that a consumer can do nothing about it, having a credit limit lowered like this hurts a person’s credit score. To help your credit limit stay the very same or get higher, there are things you can do.
Credit card limits slashed across the board
Consumers have had to deal more with the credit card company’s rules during the recession. Credit card-issuing banks are trying to get as little risk as possible before new credit card rules come into play. You will find numerous people getting their good credit scores hurt because of slashed credit card limits, reports Bankrate.com. Dennis C. Moroney, research director of bank cards at TowerGroup, told Bankrate that credit card companies are reducing credit lines and closing accounts. Many people are having a hard time borrowing money, even those with high credit score between 720 and 750.
Credit limits make credit scores drop
More than 60 million cardholders have had their credit limit slashed over the past few years. ”Risk trigger” are what they call things like regular late payments or high credit card balances, which Credit Card Guide explains some of these people having their limits cut haven’t even done. Credit limit cuts aren’t just a major inconvenience. 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.
Protecting your credit card limits
Anybody trying to keep their credit limits from going down or help their credit go up should listen to advice given at Credit Card Guide by Eva Norlyk Smith. You can always call and ask. Most credit card accounts qualify for credit limit increases once a year. Your balances should be paid off each single month. You need to be using your credit card a lot, although you shouldn’t use more than 50 percent of the line of credit. Always send within the payment on time. Don’t cancel credit cards you already have, don’t get any new either, and don’t get a credit check through your credit card company. Applying for more credit and a credit check are two really bad things to do.
Further reading
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/
