August 22 is when new credit card rules can be put into place. To make these new rules possible, banks and credit card companies have been working to cut credit limits, rates and fees on all their cards. Most of the time when the economy is down so far, credit limits are cut like this. But cardholders’ credit scores get hurt by it, through no fault of their own. But there are steps credit card users can take if they want to preserve their current credit limits, or even boost their credit limits.
Everybody is having a credit card limit dropped
Consumers have had to deal more with the credit card company’s rules during the recession. Credit card-issuing banks are trying to get as little risk as possible before new credit card rules come into play. Bankrate.com reports that even cardholders with good credit scores are getting their credit card limits slashed. Dennis C. Moroney, research director of bank cards at TowerGroup, told Bankrate that credit card companies are reducing credit lines and closing accounts. Even those with scores between 720 and 750 can’t get credit very effortlessly right now.
Credit scores drop with credit limit
In just the last few years, over 60 million cardholders have had difficulties with losing credit limits. Credit Card Guide reports that many individuals hit by credit limit cuts have not committed any of the typical “risk triggers” banks use to assess credit worthiness, like regular late payments or high credit card balances. Having your credit limit cut isn’t just an inconvenience for people. It also hurts numerous credit scores of cardholders who have had outstanding balances on their cards. Considering debt-to-credit ratios are an very important part of a credit score, this can be a much bigger deal to cut credit lines than many realize.
Helping your credit card limits
For cardholders who want to keep their current credit limit and maybe even get a credit line increase, Eva Norlyk Smith at Credit Card Guide offers tips. First of all, simply call and ask. Most credit card accounts qualify for credit limit increases once a year. Your balances should be paid off each and every single month. And use the credit card a lot, but don’t exceed 50 percent of the credit line. Always send in the payment on time. Don’t cancel any credit cards, don’t apply for any new credit cards and never ask a credit card company to pull your credit report. A credit check hurts a credit score as much as applying for a new credit card.
Bankrate
bankrate.com/finance/credit-cards/credit-card-issuers-slash-credit-limits-1.aspx
Credit Card guide
creditcardguide.com/creditcards/credit-card-tips/higher-credit-limit-6-dos-donts-342/
