What to Do If Your Credit Limit Is Lowered
Lenders can lower your credit limit at almost any time and for any reason as long as permitted by your user agreement. This happens to people with good and bad credit, people who have been with their bank for ten years or less. In other words, it can happen to anyone, but you are especially at risk if you make late payments on bills, have accounts in collections, or if you filed for bankruptcy.
And that decline is likely to catch you off guard, which is dangerous because it will put you at risk of overuse of credit. Credit usage is how much of your credit limit you use at one time; most experts recommend keeping it around 30 percent in order to maximize your credit rating. Therefore, if your limit is $ 3,000, you should aim to use no more than $ 900 at a time. If your limit suddenly drops to $ 2,000 for any reason, it could damage your account.
If this happens, you will receive an email from your bank or card issuer explaining why they are lowering your grade. Then you can take the following steps to put it back in place:
Call your issuer
Even if they mailed you the reason your limit was lowered, call your card issuer and ask for an explanation. According to Nerdwallet, here are a few questions you will want answers: “Did any particular behavior lead them to think that you were about to be exposed to credit risk? Are they suspicious of unusual spending patterns? “Or maybe there is a mistake on their side that needs to be corrected (so check your credit report ).
Then ask them if you can upgrade it to a higher level. Use all of your good past behavior to your advantage, such as data on timely payments and how long you have been a customer, or explain a one-off bad rating, such as if you recently lost your job or had an unexpected situation. Hope they understand.
Keep track of the use of the loan
Make sure that if your limit is lowered, you will pay your bill to meet the 30 percent credit utilization rate.
According to Credit Karma , if your limit is lowered and you have already withdrawn more than a new number during your billing cycle, the bank cannot automatically charge you a fee or penalty. “They must give you a minimum of 45 days from the date they receive the floor notice to charge you any such fees.” But you’ll want to make sure you use less when 45 days have passed.
And if you tend to find it difficult to maintain a low utilization rate, make it your top priority for a few months. We have a number of resources , which can help you . If not, consider transferring your balance to stay within the new limit.
After restoring confidence in the issuer and gaining control over the use, call again and ask for an increase in credit. You may not be able to qualify right away, but with a conscious effort, you can achieve what you want.