Cut Credit Lines Kicking Credit Scores

It’s a bit of the a double whammy for the American consumer, if not a triple.

First, American homeowners are watching helplessly as the equity is literally seeping out of their homes.

And second, banks and mortgage lenders are cutting credit lines, whether it be a consumer’s credit card limit or the amount they can draw on their home equity line.

The result is a reduced credit score, because the less available credit you have, the more of a credit risk you become to the bank.

It makes perfect sense because the less credit you have at your disposal, the better the chance you have of reaching or exceeding that limit.

And so consumers looking to refinance their current mortgage or open a new credit card may be getting a rude surprise in the way of a depleted three digit number, despite being flawless in the credit management department.

That’s the tough part about credit scoring, the fact that you don’t ever really have complete control over it.

But don’t buy into the recent media outcry regarding credit score dings, it’s probably not as bad as they say.

So long as you follow the basic tenets of good credit, such as paying bills on time and keeping balances low, you’ll be just fine.

Just keep in mind that even with a flawless credit score, credit card offers may not be as lucrative or appealing as they once were, thanks largely to the loose lending standards of the past that have led to the current crisis.

If your credit limit does gets slashed, don’t fret. Your credit score will likely only fall 5-10 points, which shouldn’t have any adverse effect on your ability to secure new credit.

Here are some tips on how to raise your credit score if it does fall more than expected.

(photo: saveena)

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