I didn't think Bank of America would do it to me, but I was wrong. My oldest credit card that, up until yesterday, had an $8500 limit, now has a $5000 limit!! I have been using the card every month (to keep it active), but I also pay off the balance within 20 days... I guess they didn't like the fact they weren't making any interest off of me. I wonder how much of a hit my credit score will take as a result?
I also wonder if when I pay off my Visa they'll slash the limit there too?
2 days ago
9 comments:
Wow. That's a 41% limit reduction on that credit card alone. But... I think that the effect on your credit score may not be as big as you think.... hopefully.
It may have a slight effect since you do carry a cc balance elsewhere, your total debt to income ratio has gone up a bit. But I doubt it will be a huge change. I think they are closing a card I rarely use, it will be the 2nd one closed on me for inactivity in the last 6 months.
As long as you keep your balance next to nothing it will not impact your score. Its all realative as it compares the amount being lent to the amount being owed. For example, $8500 limit with 10% used will have the same impact as $5000 with 10% used. It will only impact if the percentage you owed changed when they reduced your amount. For example $8500 with 10% used now becomes $5000 with 50% used. If that's the case, get it to the same percentage NOW and your score will bounce back!
It's not the amount, it's the ratio/percentage! Hope that helps.
I guess I need to keep in mind that the $8000 balance (on my other card) will be wiped out as soon as the money from M goes through. I checked my Equifax score this morning, and it was a 20 point hit... but that should be gone in a month. :)
I did kind of view it as a safety blanket, which has now been partially cut away. x_x
BoA closed my account completely, but I never actually called to activate the card (I didn't want it!)so I just laughed.
I see in your comment that you saw it as a safety blanket - maybe beef up your savings a little bit?
That is just crazy that they reduced your limit! I just don't get it. Especially when you are a better customer of theirs. *confused*
But, if you PIF your balance everymonth, I don't think this will hurt your credit score much.
@paranoid asteroid: Yeah, I'll start adding to my savings as soon as I get a new job. As it is, I don't really have any room to save :\
@Money Funk: I have another card with them with a 8000/9000 balance, so them lowering the first card did ding my credit score... but since I'm about to pay that off, my score should rebound.
I'm just going to be happy that they didn't do anything more drastic, like close it, because my credit history would go down the toilet if they did.
My Amex went from No-limit in October....to 10K limit in december....and now is down to 1K. whatever, they are helping ME out.
Be thankful they didn't close the card out! I had one close a card and that dropped my score 50 points by itself. That in turn caused a chain reaction whereby my two other cards jacked my rate and slashed my limit. I got the other two restored when I explained the situation and was able to provide documentation, but it was still a hassle.
In your case, you will probably see a slight decrease in score, but it shouldn't be too bad. 30% of your score is determined by your payment history (on-time, etc.) and 30% is determined by length of history - which is why mine dropped so dramatically, the one that closed was my longest standing card. At any rate, your utilization ratio accounts for 10-15% of your score, so you shouldn't see a dramatic decrease.
Kristy @ MYC
www.masteryourcard.com/blog
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