About a week ago I mentioned to my readers about the $2 Trillion in credit lines that were going to be pulled in the next 18 months by the major credit card issuers. Some of my students and coaching clients began asking me how the could combat this loss as they continue to perform credit repair for themselves.
There are several ways to fight back – just remember that you are performing this tactic to increase your credit scores and fix bad credit – not going on a spending spree!
First, pick up your phone. Reach out to your credit card issuers and just have a conversation with them. Ask them the reasons “why” they reduced your credit limits. Sometimes just calling and asking the question will get your credit limits restored. You don’t have to blindly accept their action.
Share with them details about your salary and job status. Did you recently get promoted? It helps if you have been a customer for awhile and also haven’t been recently late on any payments If you’ve been a good customer, paying on time for a long time, say so. But don’t feel too tied to the card company.
Chances are you’re still getting some credit card offers in the mail, and now may be the time to use them as leverage. Threaten to leave your current provider, pointing out the better rates their competitors are offering. If you haven’t gotten solicitations, check out Credit.com, CardRatings.com or Bankrate.com to see what you’re missing. If your issuer is playing those games with you, through no fault of your own, it’s time to shop around for a new provider. Now may also be a good time to pick up another card on top of the one you have.
Because card companies don’t want to carry as much potential for default, they’re slashing card limits. That means someone who used to have a $5,000 credit limit and spent $3,000 every month was well within the limit. But now they may be hitting their heads on the ceiling of a $3,500-a-month limit, which leaves them with an ugly “credit utilization ratio” (the amount owed relative to the credit limit). C
Restoring a high credit limit is a great goal, but not if you’re doing it just to take on added debt. Tell your card company you want to maintain your pristine (or improve your lackluster) credit score and you’d threaten that number by having a lower limit. They’ll respond better to that than to whines about wanting a new TV.
Finally, if your interest rates have spiked and you can’t switch to a better card, try to “opt-out” of the new rate. That means you’ll pay off your current balance at the existing rate, but you may not be able to make new purchases anymore. Ask your credit card issuer for details.
