Credit card company lowered credit limit
October 9, 2019 5:20 PM Subscribe
Would it help to pay it down to 30% or less (I'm considering the C/D ratio) if I have the money lying around?
The notice I received from the credit card company said it was because I had "too many new cards" (I did get a new one in April but that was for airline points and I am using it judiciously) and a history of delinquent (accounts? payment? it's not in front of me), which I need to clarify/dispute since I've checked my annual credit report often. Several years ago I did have delinquent medical bills <$500, 5 or 6 small ones, but I did eventually get everybody paid.
In fact I've been working on my finances mindfully for several years now and they've improved a lot, including my score.
Question: Should I pay it down to make the D/C ratio look a little better or will
they just lower it again?
The notice I received from the credit card company said it was because I had "too many new cards" (I did get a new one in April but that was for airline points and I am using it judiciously) and a history of delinquent (accounts? payment? it's not in front of me), which I need to clarify/dispute since I've checked my annual credit report often. Several years ago I did have delinquent medical bills <$500, 5 or 6 small ones, but I did eventually get everybody paid.
In fact I've been working on my finances mindfully for several years now and they've improved a lot, including my score.
Question: Should I pay it down to make the D/C ratio look a little better or will
they just lower it again?
I think it's a good idea to pay it down as much as you can. I don't believe that would be a trigger for the cc company to lower your limit further. If anything, a lower balance to limit ratio would be a factor in improving your overall credit score.
posted by bahama mama at 5:37 PM on October 9, 2019 [1 favorite]
posted by bahama mama at 5:37 PM on October 9, 2019 [1 favorite]
Kudos for being able to get your finances in order! It's not such an easy thing to do.
If you have the money, pay it down. Do you want to keep paying that interest? There is no example where having ongoing credit debt is good. Pay it down if/when you are able to. In my experience, paying my CC bills on time and rarely having instances where I couldn't fully pay each month (but still paying as much as I could each month until I cleared the debt) all meant that my credit limit has repeatedly gone up over the years.
posted by acidnova at 5:37 PM on October 9, 2019 [6 favorites]
If you have the money, pay it down. Do you want to keep paying that interest? There is no example where having ongoing credit debt is good. Pay it down if/when you are able to. In my experience, paying my CC bills on time and rarely having instances where I couldn't fully pay each month (but still paying as much as I could each month until I cleared the debt) all meant that my credit limit has repeatedly gone up over the years.
posted by acidnova at 5:37 PM on October 9, 2019 [6 favorites]
I never carry a balance and if anything feel like I'm constantly trying to avoid companies wanting to increase my limits. Pay it down because interest is a racket, yes, but there's no need to worry that they're going to take any more away. Excellent scores come of utilizing credit enough that nobody closes your account and paying promptly, not from carrying balances per se. I would recommend figuring out what they're talking about sooner rather than later though. Do you check your credit report from all of the agencies, and look at the inquiries as well as the actual accounts? Sometimes things show up in one place and not another.
posted by teremala at 6:52 PM on October 9, 2019 [3 favorites]
posted by teremala at 6:52 PM on October 9, 2019 [3 favorites]
I had a company lower mine, which I took personally until they declared bankruptcy. It might be them not you.
posted by salvia at 7:57 PM on October 9, 2019 [1 favorite]
posted by salvia at 7:57 PM on October 9, 2019 [1 favorite]
I had an interesting and relevant experience recently:
I had three credit cards, two with Company A and one with Company B. Then I ran into a period of unemployment and let my accounts go delinquent for a bit, planning to make it up once I got to the other side (don't do this, bad idea, I wasn't thinking straight).
I did get to the other side soon enough, and I immediately-as-possible paid all my credit card debt down to zero. Phew!
Then I got a notification from Company A that they were full-on cancelling one of my cards with them due to the delinquency. The letter made it clear that this decision was made official AFTER I had paid down both card balances to zero.
I called Company A and asked them to reconsider. Their answer, predictably, was that there was nothing they could do. Alas! No problem, though, I just kept up on my payments after that. Didn't necessarily pay the cards down to zero every month, but I did when I could. Also, I didn't miss having that second card at all.
Fast forward to literally yesterday, when I got an email from Company A saying they were increasing my credit limit on my remaining card because I'm such a good customer. I don't even want a higher credit limit!
So in summary, credit companies are mercurial and are only too happy to extend credit to you as long as they think they'll collect some of that sweet, sweet interest. As Miko said, pay down your debt for your own sake. Once you do, your credit card company will gladly give you an opportunity to borrow more. Be judicious!
posted by ejs at 8:15 PM on October 9, 2019
I had three credit cards, two with Company A and one with Company B. Then I ran into a period of unemployment and let my accounts go delinquent for a bit, planning to make it up once I got to the other side (don't do this, bad idea, I wasn't thinking straight).
I did get to the other side soon enough, and I immediately-as-possible paid all my credit card debt down to zero. Phew!
Then I got a notification from Company A that they were full-on cancelling one of my cards with them due to the delinquency. The letter made it clear that this decision was made official AFTER I had paid down both card balances to zero.
I called Company A and asked them to reconsider. Their answer, predictably, was that there was nothing they could do. Alas! No problem, though, I just kept up on my payments after that. Didn't necessarily pay the cards down to zero every month, but I did when I could. Also, I didn't miss having that second card at all.
Fast forward to literally yesterday, when I got an email from Company A saying they were increasing my credit limit on my remaining card because I'm such a good customer. I don't even want a higher credit limit!
So in summary, credit companies are mercurial and are only too happy to extend credit to you as long as they think they'll collect some of that sweet, sweet interest. As Miko said, pay down your debt for your own sake. Once you do, your credit card company will gladly give you an opportunity to borrow more. Be judicious!
posted by ejs at 8:15 PM on October 9, 2019
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posted by Miko at 5:24 PM on October 9, 2019 [25 favorites]