This topic is very important so please pay attention. Creditors are lowering your line of credit on a major credit card because of two reasons. One is that the default on monthly payments is increasing. The second one is individuals that continue to have high balances.
Let's say you have a $ 5,000.00 line of credit on a visa and keep a high balance at least 90% or even maxed out to the limit, you are a riskier customer to that creditor. So what is happening is now the line of credit is lowered to for example $ 2,000.00 The problem is not only have you maxed out but are now over the limit which will have a negative impact on your fico score. This will impact the score until the high balance falls off your credit report which may only happen seven years after you pay the balance below the credit line of $ 2,000.00 The only other way to recover from this faster would be if the creditor raised the line of credit on the account past what the high balance is being reported.
This is something very important ot think about. That s why you need to keep your balances below 50% utilization. Even better below 10% or even paid in full. Not all financial institutions will do this. The one's that will not will not approve you for new credit until you can show a few months of having a ,ow balance on any account.
