I just read this CNN article that was very interesting and pertinent. As a result of the global financial crunch, issuers are looking for ways to decrease their exposure to cardholders that are deemed ‘riskier,’ with the goal of protecting against defaults. As such, they are lowering credit lines.
The problem here is twofold: (i) this can hurt your credit score by changing your credit utilization rate, and (ii) this will reduce your available purchasing power.
My advice… keep a watchful eye on your Credit Limit by viewing your statements or calling your card issuer, and monitor your Credit Score for free at either Experian, TransUnion, Equifax.
How your credit limit can hurt your score
August 15, 2008
…Banks and other card lenders are trying to better protect themselves from more massive losses like those they’ve seen from subprime mortgages.
As a result, they are looking for ways to reduce their exposure to cardholders more likely to default. That’s why they are lowering credit limits, which means they are reducing the maximum amount of credit extended to an individual, along with boosting card interest rates and allowing fewer balance transfers… more
4 responses so far ↓
Lacey // September 16, 2008 at 12:02 pm |
Dear Brain,
If I am late on one credit card payment, will that affect my credit score?
-Lacey
creditbrain // September 16, 2008 at 1:04 pm |
Hi Lacey,
it will depend on the depth of your credit history. if you have not been late with any payments for several years than it is unlikely to have significant influence. however, if this is the first payment it may be a problem. the best thing to do is to check with the credit reporting agencies.
if, there is a good reason for being late (i.e. travel, health related matter, etc.) you should notify your card issuer and explain the details of the situation. they just might have mercy on you and credit your account for any incurred interest charges as a result of the lapse.
sincerely,
the brain
David // September 17, 2008 at 11:55 am |
CB, who do I contact to get a report of my credit score?
Thank you,
David
creditbrain // September 17, 2008 at 1:15 pm |
Experian, TransUnion, or Equifax. You can get a free report by following the links in the post above.
cb