Letters From a Credit Card Company

When I refinanced my home, I paid off several credit cards with the deal.  3 of these cards were all issued by one bank.  Now that they are paid off (or mostly paid off), I got 3 letters in the mail today from this bank.  They all stated the same information telling me they were lowering my credit limits.  Two of the cards now have $1000 limits and one has a $3000 limit.

I’ve read that banks are limiting how much credit they offer in the these tough economic times, so maybe that’s all this is.  Either that or they just don’t think I’m a good candidate to have the large limits anymore.   I have no desire to use those limits, so it’s really not important.  It just seems odd when for years all of my limits went up.

The only thing this could affect is my credit score.  The lower balances will help my score, but not as much as they would if the limits remained high.  With the lower limits, my debt load won’t change as much.  When the FICO credit score is calculated, banks look at how much credit you have and how much of that is used.

Total Balances ÷ Total Credit Limits = Debt Load

Owing $10,000 looks a lot worse if you only have $15,000 available credit, then it does if you have $30,000 available credit, that’s why it’s never a good idea to max out your cards.

I’m not overly concerned with my credit score, since I don’t want any more debt.  Like I mentioned in a previous post, the only credit I would apply for now would be a card that would offer me 0% interest for one year on balance transfers, without large transfer fees.