Your credit line may be reduced

In the past, credit line reductions were not a thing that those with excellent credit scores and unblemished payment histories would worry about. Not anymore.

While credit line cuts are usually reserved for those credit card holders who miss payments or have other negatives attached to their payment histories, this is no longer the case. In recent months, even some of those seemingly “perfect” card holders – those who pay balances in full each month and have never been late or missed a payment – have seen their credit lines reduced.

Fair Isaac Corp. recently released a study in which it examined the effects of credit line reductions on credit scores. The study found that between April 2008 and October 2008, 16 percent of consumers experienced a reduction in total revolving credit. 80 percent of that 16 percent mentioned above experienced the reduction without any risk triggers (missed payments, collections accounts, etc.) added to their credit report.

In other words, the study found that of the consumers whose credit lines were cut, about 4 out of 5 experienced the reduction without any prior negative events that could have seemingly caused, or at least contributed to, the reduction.

Recommended reading: Credit cuts befall even top scorers