Reduced Credit Card Limits Could Hurt Your Credit Score
While you many not think this affects you cause your credit cards are not maxed out, there may be other repercussions. Most notably if you carry a balance and your credit limit is lowered, your credit card utilization (credit card balance/credit limit) may increase. Higher credit card utilization could then lower your credit score which could then increase your interest rate or lower your limit again. It is a vicious cycle and can be very unfair. Here are a few tips to avoid the trap.Keep an eye on your credit cards limits. Your credit card company should notify of any impending changes. But with all the junk mail it can be easy to miss. Almost most people take their credit limit as a constant and only look at balances.
Try to lower your credit card debt. This is easier said than done but this should be a goal at all times to improve your credit.
Have several credit cards. Having a 3-6 credit cards gives you options should one of your issuers lower your limit or increase your interest rate. If you are looking for a card, these are some of the best credit cards for each credit range.
Keep your balances on any given card low. High credit card utilization on any single card can be a sign of future risk so make sure that your credit card utilization is lower than 35% on any single card.
