Can credit card companies lower your limit?
Credit card companies routinely offer limit increases to entice more spending among good customers but they are just as likely to decrease the limit when their creditworthiness suffers, according to The Simple Dollar. When a person applies for a credit card, the issuer must ask permission to check that person’s credit to make a decision. Many people might not realize, however, that The Fair Credit Reporting Act allows them to continue to monitor that credit into the future.
If a customer falls behind on the credit card payments or even has issues with other lenders that show up on a credit report, the bank may choose to mitigate the increased risk by lowering the amount of money the customer is allowed to borrow on credit. In addition to cutting your access to more credit, a reduced limit can have a further negative impact on your credit score by raising your credit utilization ratio if the balance stays the same.
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