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Decreasing Credit Card Limits II A Major Score Impact

How Does A Decrease In Credit Limit Effect Me? 

Your credit utilization rate is one of the most important factors when it comes to your credit score. Depending on how much of the available balance you use will reflect what kind of borrower you are and can be the deciding factor in a substantial credit boost. The lower your credit utilization rate, the better impact the account will have on your credit report. 

It can be frustrating to hold a lower credit utilization rate of 15% on an open trade line, but find that with a drop to your allotted limit, you have almost doubled your original rate. This can lead to lower credit scores and curbs one’s buying power substantially! A sudden change in your credit habits can also portray you as a risky borrower and can spur other lenders to reconsider limits as well.

Can They Do That?!

Just as a card issuer can raise your credit limit as a reward for your continued loyalty or due to your personal request, they can also lower the amount you can access when borrowing from them. This can happen for a multitude of reasons but primarily is due to the cardholder being seen to have a higher risk of default.  An example can be seen with holders that have added an authorized user onto the account; if one has a substantially lower credit score, the lender may see the account as being at risk. Another example comes with the recent dealings of the Covid 19 epidemic. With many borrowers experiencing financial difficulties in the last year, lenders have had to take protective actions with the exponential rise of credit utilization from their borrowers. 

Though federal laws provide some protections related to credit limit decreases, banks usually have free rein to edit your credit limit as they see needed. This can be seen as an unfavorable or even shady tactic, but as they are the ones lending the money, the ball rests in their court. 

What Are My Rights? 

If the credit changes do not breach your cardholder agreement or federal credit regulations, issuers can make changes to your card’s terms as they see fit. Currently, there are no laws that can protect consumers from a credit limit decrease or the damage that will potentially occur with the change. 

The Fair Credit Reporting Act does require the issuer to send an adverse action notice to the consumer when they take an action based on your credit report. This does protect you from misinformation if another person’s poor account history is added to your report; you will receive notice of that change and can take appropriate action to correct it! 

The good news is that it is extremely rare for an issuer to reduce your credit limit lower than the amount you have already charged to your card (IE: if you have a credit utilization rate of $2000 and you have charged $1500 to the account, it is extremely unlikely for the issuer to lower the limit below that $1500). If there is a rare case of the issuer decreasing the amount below the current borrowed amount, there are CARD Act provisions that can protect you from any fees that may come from maxing out the account. With this law in place, your issuer is unable to charge the “over the limit” fee within 45 days from the credit limits change.

Has your credit score dropped because of a recent cut to your credit limits? Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors and complete a free consultation please give Credit Law Center a call at 1-800-994-3070 we would be happy to help.

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How Can I Get My Old Limit Restored? 

Now that your limit has been cut, what are some steps you can take to begin restoring it? If you have had your credit limit lowered, the first thing you need to do is verify with your card issuer and ask a representative for an explanation for the credit limit drop. Depending on the reason for the limit cut, there are a few things you can do!

If the cutback was caused by a financial setback that prevented you from making your payments or keeping your balance in good standings, just explaining the situation can make all the difference.  This could be going over what exactly happened that threw off your standing or an explanation of what steps you are going to take to get everything back in order! Many issuers would be more than happy to work with you to restore your credit limit if certain criteria are met! This can be anything from making on-time payments over an extended period of time or paying down your balance to a certain number.

Another way you can potentially help your situation would be to write a goodwill letter to the issuer! A goodwill letter can also prompt the issuer to remove a late payment from the report depending on your credit history. This option can take substantially longer to take effect and is only valid if you held prior positive payment history.

Your issuer is not required by law to make changes to restore your previous credit limit and these prior attempts may not show results. If you are denied and you believe that the card company is neglecting to assist you in any way, you can file a complaint with the Consumer Financial Protection Bureau to attempt to provide urgency to the situation.

 

Don’t Put Yourself At Risk

It is not common for card issuers to make changes to your credit limit, but there many cases where it does happen. There are a few ways that can help ensure you are never the target of a credit limit cut. Be sure to monitor your credit report for any changes, errors, and fraudulent accounts that could lead to a credit limit cut. You are entitled by law to one free credit report per year from each of the major credit bureaus, and it can be obtained at AnnualCreditReport.com. There are many other monitoring services out there like Credit Armor that take a deep dive into your credit report and provide helpful tools to help dispute and correct misinformation on your report.

The best way to prevent a decreased credit limit and keep your credit in good standings is to make sure to keep your credit utilization as low as possible, pay your balances on time and monitor your report for any inconsistencies that may pop up!

 

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Why Should You Hire A Law Firm For Credit Repair?

Why Consumers Hire a Law Firm For Credit Repair

There is a major difference between what a credit repair company can do versus what a law firm specializing in credit repair can.  What you may find even more interesting is that a consumer can actually do more than what a credit repair company will. A Law Firm however, trumps all. We have been using the law since 2011 to help consumers every day and this is what makes us far superior to other “repair” companies.

Here is how we help our consumers and fight for their rights!

Harassing Phone Calls:

If you are constantly receiving phones calls and are tired of trying to dodge collectors, we can get these calls to stop. At Credit Law Center   we notify all your creditors that you are now a client of our law firm. We also send out correspondence to them indicating that all communication to you should go through us. They must comply with this request! If they do not, it is a violation of the Fair Debt Collection Practices Act and they are liable to you and to us. If they continue calling after you’ve informed them you are represented by Credit Law Center, this could mean money in your pocket!

Violations with FCRA
The Fair Credit Reporting Act    mandates that everything on a report must be verifiable, accurate and timely. A recent study indicated that 79% of credit reports contain errors! Many of these errors are easy for us to spot and we can give our consumers a great idea of what to expect on certain items that may in fact fall off due to a FCRA violation. At Credit Law Center we sue for those inaccuracies.
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Debt Negotiation:
As a law firm we have the ability and power to negotiate judgments, repossessions, charge off, or any sort of debt that is still reporting on a report.  We use the power of the law and our attorneys to negotiate these items in a way that’s favorable to you. While not Debt Consolidation or Bankruptcy, we do have significant tools available to us that help negotiate these debts and save you significant amounts of money! We have four attorneys in house that you can lean on for advice and guidance while working on negotiation. Their extensive negotiating experience with banks, collection companies, and collection attorneys has helped our clients save thousands.  Our goal is to negotiate the debt as low as possible out of court and get your case dismissed.

We Win!
At Credit Law Center we use federal statutes to assist our consumers. The first one is the FDCPA or the Fair Debt Collection Practices Act.  This  statute lays out a specific way in which debts can be collected both legal methods and illegal methods. The second is the FCRA or the Fair Credit Reporting Act.   Lastly is TCPA (Telephone Consumer Protection Act)  This act is specifically designed for text message, fax machine violations, pre recorded voicemails.  Three of these federal guidelines provide for attorney’s fees if we are successful. What that means is if we take your case and pursue it and are successful, the other side pays our fees and as our client you would owe us nothing! Please contact us today if you think you might have a case in any of these areas of the law, we would happy to speak with you further 1-800-994-3070!