How do you lower your credit limit without lowering your overall credit score?
jaquenette strowd asked:
I have only have one revolving credit card, and I have a very high credit score. Because of this overall score they subsequently increase my credit line, even though I don’t ask for or use this revolving line of credit. Question? I have been told if you ask for a credit line decrease they lower your overall credit score? Why? What can you do to minimize a lowered credit score?
Leslie
I have only have one revolving credit card, and I have a very high credit score. Because of this overall score they subsequently increase my credit line, even though I don’t ask for or use this revolving line of credit. Question? I have been told if you ask for a credit line decrease they lower your overall credit score? Why? What can you do to minimize a lowered credit score?
Leslie
Tags: Credit Card, Revolving Credit, Revolving Line Of Credit
October 22nd, 2010 at 8:25 pm
A credit score is more than just a credit history, or assessment of risk. Lenders use it to evaluate how profitable it will be to lend to you. One of the factors of your FICO score is how much available credit you have. If you lower that number, or your ratio of available debt changes then so does your score. A good way to lower it is to keep a small balance your card. Pay it off and charge it back off every month. As long as you keep it small the credit card companies see you don’t use all of your available credit, they will tend to lower your available credit. However this may still lower your score
October 25th, 2010 at 1:09 am
Reducing your credit limit may not be your best option for maintaining your high credit score.
Your FICO credit score is made up of several factors including your debt-to-credit ratio (which is basically your total debt divided by your total credit available). The higher your debt load to the available credit you have to draw on, the lower your FICO score can be. Therefore, to keep your credit score high you will want to reduce the total amount of debt in this formula while not lowering your availalbe credit (thus minimizing the chances of a lowered credit score).
You also want to be sure to keep your revolving cards active, but with low balances to prevent them from being closed. Good luck!
If you are interested in learning about some other factors that make up your credit score, read this: