Did you know that credit card companies can LOWER your limit without notifying you? It doesnt happen often but they will do it if…
– You use too much of your available credit.
– The card is inactive or seldom-used.
– The economy is uncertain.
A lower credit limit can affect your credit score if it changes your credit utilization ratio, the percentage of your available credit being used.
Utilization is a key factor in your credit score. A rule of thumb is to use less than 30% of your available credit.
Even if a reduced limit pushes you over that percentage, it’s not fatal! All you have to do is pay down your balance down by the same percentage your limit was reduced!
Example if you dropped from a $1,000 limit to $500 that’s a 50% drop. Just reduce your balance by 50% and your score will not change!
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