Sometimes, a hit to your credit score is unavoidable
Q. I have good credit, but a lot of debt. I'm managing it, I'm paying it down, but it's going to take time. The balance on one of my credit cards is all from a balance transfer, and the interest is very low and fixed. Until this past week, my credit limit on this card was more than double the balance. Last week, they reduced my credit limit down to almost the balance on my account. Now when you look at the ratio for my debt compared with my credit limit, it's much worse than before. I had close to $8,000 in available credit. Now I only have $375.
Can I post a note on my credit reports under this account that says something about the reduction in credit limit and that it was not changed because of something I did wrong?
ANONYMOUS
A. If it's any consolation, two credit card specialists said you are in the company of millions of people.
"Unfortunately there is really no recourse for the consumer in this type of situation, in terms of putting a notation on their credit report," said Ben Woolsey of CreditCards.com. "The credit card company is well within their rights to reduce the credit limit or change any other term of the account at any time for any reason, regardless of whether the cardholder has violated the terms of the account agreement or not."
Banks have grown skittish over their risk of losing money, so they are scaling back what customers can borrow.
Both Woolsey and Curtis Arnold, founder of CardRatings.com, agree that your credit rating is going to take a hit. Arnold says to go ahead and write the note on the off chance that someone might review it manually, but it will be of no benefit to your credit score.
Woolsey and Arnold differ on the potential of requesting your credit line be restored, but it can't hurt to ask. Both suggest making another balance transfer to restore your ratio. "The only catch is that your credit score needs to be in the 730 range to qualify for the best offers and if your score takes a big ding as a result of your line decrease, then you will want to move very quickly" before your new credit line decrease is reflected on your credit report and your score drops, Arnold said.
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