5 Ways to Avoid Taking a Hit to Your Credit Score

Credit card companies lowering limits

Some credit card holders have been shocked recently when they found out their credit limits had been slashed — big time. The credit crunch is causing credit card companies to lower people’s credit limits, sometimes unexpectedly.

Protect your credit score

The amount of credit you are approved for compared to your debt has a big effect on your credit score. Lowering your credit can lower your score, which can make it much more difficult and expensive to get loans and other lines of credit.

From ABC News, here are five ways to avoid getting your credit limit cut.

1. Stick to 30 percent

Keep the balances on all of your credit card at less than 30 percent of your total available credit, especially if you have multiple cards. A balance of more than 30 percent on multiple cards is a huge red flag for credit card companies, and they may use that to justify cutting your credit limit.

2. Pay on time

Never, ever make a late payment on your credit card. A great way to avoid making late credit card payments is to sign up online for automatic payments. If you are concerned about your credit score and come up short on cash, it might make sense to get a payday loan to cover your bill on time. Taking out a payday loan doesn’t affect your credit score, as long as you repay it on time.

3. Speak to a human

If your credit card company automatically reduces your credit limit or changes your interest rate, call the company. Sometimes computers make changes automatically. If you talk to someone you might have a chance of getting them to reverse the decision. ... click here to read the rest of the article titled "5 Ways to Avoid Taking a Hit to Your Credit Score"