The credit crisis has resulted in more conservative lending practices. These days, it’s more difficult to qualify for loans that would have been easily available two years ago. That’s because lenders aren’t willing to take the financial risks they once took.
This trend has also caused many banks and card companies to lower their customers’ credit card limits. The unfortunate trickle-down effect is lower credit scores for card holders.
Credit scores are affected by a person’s debt ratio, which is the amount of debt they carry compared to their available credit. When credit limits go down, debt ratio goes up - and credit scores suffer as a result. Card holders might cease to qualify for loans, or they might be required to pay higher interest rates.
Always stay updated on your card’s terms and conditions, and watch carefully for changes to your credit limit. A credit monitoring program is also a good way to be alerted to sudden changes in your credit score. Equifax is one company that offers low-cost credit monitoring services. A web search for “credit monitoring” will turn up plenty of options as well. A little research and a little vigilance will prevent any unpleasant surprises on your credit report.
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