-
Credit Card Limit Decrease
This is more of a legal question for a paralegal or attorney. Can a credit card company lower a consumer credit card limit when the consumer has been a loyal customer for three years, never been late, was a victim of credit card fraud but yet paid the minimum credit card monthly interest payments after an internal fraud credit dispute was ruled in favor of the merchant, and paid the fraudulent charges in full while preparing to file changes and lawsuit? If you can respond to facts, it would be greatly appreciated. Thank you all.
-
2 Replies
-
Yes, it is legal for credit card companies to lower your credit limit. The question I have is:
1. Is the client maxed out on other cards
2. Has the client changed their spending habits? Meaning they used to shop at Walmart and now shop at the dollar store for example….
Your creditors do frequent soft pulls on your credit without your knowledge. They look for changes in behavior. They look for signs of financial distress. When they see any changes in behavior, they tend to drop your credit limit to you current balance, causing you to max out their card, drop your credit scores, and now make it more difficult for you to qualify for additional credit.
This is part of their terms and conditions when you accept use of their credit card.
Hope this helps 🙂
Have a great day!
-
Creditors do have the abililty to reduce the credit limit based on several factors, income changes, (or lack of inputting your income when prompted. Many creditors do this annually), seeing a lower credit score, seeing higher outstanding balances on credit cards, and potentially other internal policies outlined in the terms of service. Essentially, if they see a higher risk profile, they are going to do what they can to mitigate the risk. In an environment like today, their policies are likely more conservative as more people are defaulting on credit cards.
Even if someone has not been late on a payment, other factors may be seen as a risk, causing the credit limit decrease. This can include not paying the balance down on that card, or as mentioned above, overall carrying higher balances on revolving debt.