Credit card companies lowering limits
Some credit card holders have been shocked recently when they found out their credit limits had been slashed — big time. The credit crunch is causing credit card companies to lower people’s credit limits, sometimes unexpectedly.
Protect your credit score
The amount of credit you are approved for compared to your debt has a big effect on your credit score. Lowering your credit can lower your score, which can make it much more difficult and expensive to get loans and other lines of credit.
From ABC News, here are five ways to avoid getting your credit limit cut.
1. Stick to 30 percent
Keep the balances on all of your credit card at less than 30 percent of your total available credit, especially if you have multiple cards. A balance of more than 30 percent on multiple cards is a huge red flag for credit card companies, and they may use that to justify cutting your credit limit.
2. Pay on time
Never, ever make a late payment on your credit card. A great way to avoid making late credit card payments is to sign up online for automatic payments. If you are concerned about your credit score and come up short on cash, it might make sense to get a payday loan to cover your bill on time. Taking out a payday loan doesn’t affect your credit score, as long as you repay it on time.
3. Speak to a human
If your credit card company automatically reduces your credit limit or changes your interest rate, call the company. Sometimes computers make changes automatically. If you talk to someone you might have a chance of getting them to reverse the decision.
4. Keep your account active
Dormant accounts will be first in line for credit limit cuts. Use your credit card at least once every three months to make sure your account remains active. If you make a purchase on your credit card and pay it off immediately it will keep your credit score and credit limit high.
5. Write a letter
You can write a letter to be included in your file at the big three credit bureaus. Explain why your credit score has taken a hit. The letter won’t raise your score, but if other businesses considering you for credit see it, it might affect their decision.
Nice job, i have learned a great deal of how to save my credit scores.
As the economy is passing a tough time, it is obvious that more and more people with face problems in handling their debt. It is a relieve that few financial institutions are there to help those people. There are several websites too that assist people to come out from the debt burden.
One of the best things to do is also to avoid ever getting a credit card. That said, the best thing to do with the little plastic buggers is to only use them sparingly, and pay them prompt. You don’t want to build up any kind of balance.
Thanks for the tips. I have let my cards sit in the safe for ages and not used them. Maybe a little purchase every now and then with payment in full will help my credit score some. I recently had a seldom used card go from over $1000 credit limit down to $100. I cancelled the card.