Dropping limits and credit scores

When examining changes in their personal finances, some consumers may be concerned that drops in credit card debt limits may lead to damaging their credit score.

In a recent column for the Los Angeles Times, financial expert Liz Pulliam Weston fielded a question from a reader who saw their credit limit on a card drop from $36,000 to $18,000, which makes them worried about their credit score.

Pulliam Weston noted that a change in a credit score based on a dropped credit card debt limit depends on how much of their credit the consumer uses.

“If you only ever use a fraction of your available credit, even a large reduction in your credit limit shouldn’t send your scores plummeting,” Pulliam Weston wrote.

Pulliam Weston noted that if the reader stuck to using 10 percent of their credit limit, their credit score shouldn’t suffer. However, because the reader’s credit score was over 800, they may also consider shopping around for a new credit card. Having a good credit score means consumers are more desirable customers.

A recent survey from FICO shows that dropping credit card debt limits can have a minimal effect on credit scores, especially if the cardholder has a low balance and keeps up on their payments.