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Can a Lower Limit Affect My Credit Score?

Ask Savvy: Can a Lower Limit Affect My Credit Score?

Dear Savvy,

So, I got a letter in the mail today from my credit card company telling me that they were lowering my credit limit. I don't use this card much, don't carry a balance on it, and definitely don't need a $14,000 limit. I'm just wondering, does it affect my credit score or anything?

To see my answer,


Savvy says: Even though you don't carry a balance on the card, a lower credit limit could impact your credit score. To find out why,


Credit card limits are taken into account when calculating your credit-to-debt ratio, meaning how much debt you have compared to the amount of credit available. If you're carrying debt unrelated to the card, having less available credit lowers your aggregate credit limit, which can bring down your credit score.

Add up all of your existing balances and divide that number by the sum of all your cards' limits. What you end up with is your utilization percentage, and it's best to keep this number under 35 percent to maintain a good credit score.

Credit card carriers are cutting limits more frequently these days so be sure to open your mail, like this reader did, instead of sending it straight to the shredder. Carrying zero balances on your cards is ideal, but be sure you're using them at least every few months so you have a better chance of keeping your limits in tact.


JaimeLeah526 JaimeLeah526 8 years
That makes sense. My credit limit was raised in 2008.
Spectra Spectra 8 years
We actually had the limit raised on our credit card, just in case we would ever use it to purchase something huge...that way, we'd get a serious rebate from it. But we never really carry a balance on it, so that's probably why they raised it. They probably couldn't really care less because they don't make any money off of us.
expresso14 expresso14 8 years
I have 2 cards - one through a credit union, which I don't worry about too much and one that I keep wondering if they will cut my limit since I haven't been charging much on it lately and I pay it off every month (I did however use it to finance my kitchen makeover last year).
c-a-t-h c-a-t-h 8 years
I had this happen to me on a Citi card I used often. They cut the limit by more than 50% (at least $10K). To make matters worse, they cut the limit and didn't send a letter until 2 months later. Thank god I check my accounts often and had no outstanding balance on it. When I called, the rep couldn't justify the action or do anything about it without doing another hard pull. So instead, I just stopped using it and moved onto another card. I didn't close the account (that would definitely hurt my score). I love how the banks are taking taxpayer money and then turning around and screwing them anyway...
GlowingMoon GlowingMoon 8 years
I don't know because I pay it off every month, so the interest rate never applies to me. :)
cvandoorn cvandoorn 8 years
My credit limits were all lowered despite my excellent credit score. I worried that it would affect my score. Thanks for the clarification!
ayanaphil ayanaphil 8 years
Good stuff. I had a company cancel my account because I didn't use it for six months. Now that I've paid off my credit cards and I'm carrying a zero balance on the two remaining ones, I'll be sure to use them so the same thing doesn't happen again.
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