My wife and I are on vacation in New York. She would kill me if she knew that I was doing any sort of work including posting anything to my blog. She is still sleeping, so now I can send this note to you.
Today, there is a very interesting article in the USA Today. It talks about banks lowering credit to credit card holders. If/when a bank lowers a consumer’s borrowing limit, it will have the unintended consequence of lowering the consumer’s credit score (FICO) score. If you do not already know, your FICO score is made up of a number of factors. The thing that makes this article disturbing is that it is not something that the consumer can control. For example, a consumer’s credit necessarily takes a hit when the consumer submits a late payment. In this case, the consumer’s credit gets dinged by the bank just for lowering the credit limit.
In my experience a bank will most likely look at a consumer’s payment history and look at the balance carried and for how long it has been carried before it makes a decision to lower a consumer’s maximum credit. In my opinion, if you are carrying a significant balance on your credit card, I would recommend that you find a way to refinance that balance with another lender. While a home equity loan may be a very difficult thing to do today, you may want to consider tapping into your home to pay off your credit card balances. Just be sure not to rack up a large credit card balance again.