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.
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