Will it hurt my FICO score if I ask my creditors to lower my credit limit?
Friday
If a credit check is run, will the reports show a decrease in the credit limits on my accounts?
The act of decreasing the limits will not lower your score directly. But if you carry a ballance on any of your cards, the decreased limit will show that you have a higher utilization rate (the amount you owe on the cards divided by the total limit on the cards). A higher utilization rate lowers your credit score.
As long as you keep your total utilization rate below 30%, the lower limits on the cards should not hurt your score much if any.
Categories: check fico score
The act of decreasing the limits will not lower your score directly. But if you carry a ballance on any of your cards, the decreased limit will show that you have a higher utilization rate (the amount you owe on the cards divided by the total limit on the cards). A higher utilization rate lowers your credit score.
As long as you keep your total utilization rate below 30%, the lower limits on the cards should not hurt your score much if any.
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Yes, your credit score could drop if your credit limit goes down.
Part of the credit score is measured by calculating debt to credit limit ratios. You want to use less than 50% of your available credit at all times. On the other hand, if you don’t carry any balances, it might not matter if you lower your limit, as the ratio will remain 0.
But I don’t know why you’d want to do that, unless you’re giving someone access to your card that you don’t trust very much (a bad idea anyway). Keep the availability in case you ever have an emergency or really need it–it’s hard to get credit when you need it., sort of like insurance.
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It likely will, yes.
Your credit is based, in part, on the amount of credit already extended to you (ie. your credit limit) and the amount of credit you are using.
For more information http://www.how-is-your-credit.info/
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Yes, it will.
If you owe 5k and have a 10k limit, you have a 50% credit-to-debt ratio.
If you reduce your limit to 6k, now you have a 83% credit-to-debt ratio.
On the other hand, if you increase your limit to 15k, you now have a 33% credit-to-debt ratio. You want this ratio to be under 33% to avoid negatively reflecting in your FICO score.
Be blessed,
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Decreasing the limit is not, on its own, a bad thing. However if you carry a balance on any cards and you decrease the limits, you make your overall utilization ratio (balance vs. limit) higher– and if its over 30% it can ding your score.
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