 TITLE: What to Do if Your Credit Limit Decreases CONTENT: Why Did My Credit Limit Go Down?\n--------------------------------\nYour credit limit is the ceiling for how much money you can borrow through a revolving account, such as a credit card or line of credit. For example, $3,000 might be the maximum amount you can charge on a credit card.\nSeveral factors go into determining your credit limit. A lender normally sets your credit limit after reviewing at least one credit report and one credit score supplied by the three consumer credit bureaus (Experian, TransUnion and Equifax). Your credit report and credit score reveal your creditworthiness, which reflects how much money you owe to other lenders and other indicators of how you handle credit. The lender also might consider your household income and your payment history.\nBut even after your credit card issuer sets your original credit limit, it can decrease that limit without warning. When a card issuer reduces your credit line, however, it cannot impose an over-the-limit fee or penalty interest rate if you go over your new credit limit until 45 days after you've been notified about the lower limit.\nSome of the reasons a lender might decrease your credit limit include:\n*   **Missed or late payments**: The lender might have detected a number of missed or late payments, suggesting that you might be experiencing financial difficulties.\n*   **High credit utilization**: Your credit reports might show that you're using a significant amount of credit. This is reflected in your credit utilization ratio, or the amount of revolving debt you're using. The ratio is figured by dividing the amount you owe across all of your credit cards and other revolving credit accounts by the credit limits of those accounts. A ratio of 30% or more can start to hurt your credit scores, while a ratio in single digits is considered ideal. Always aim to keep the ratio under 30% to maintain a healthy credit score.\n*   **Low credit utilization**: If you haven't used a credit card much or at all over a certain amount of time, the card issuer might lower your credit limit.\n*   **Change in buying behavior**: Credit card issuers track your spending and how it changes, and may use the data they gather to alter your credit limit. But here's the good news: If you pay your card balance in full each month, the issuer could maintain the credit limit you had before you changed your spending habits. END