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HSBC lowered my credit card limit from $ 8000 to $ 3000, but I had 0 balance. They stated it was due to low utilization. I have an excellent credit score and I do not want to be jeopardized/penalized just because HSBC may not be fairing well. Please advise.

7 Thoughts on Banks are reducing credit card limits, will that affect our credit scores? What can we do about this?
  1. Reply
    David Z
    July 31, 2011 at 5:02 am

    it will effect scores temporarily. There is nothing you can do about it.

    Apparently the bank did not feel your usage warranted an $ 8,000 line.

  2. Reply
    July 31, 2011 at 5:32 am

    As long as your not carrying balances on your credit cards there will be no effect on your debt to credit ratio or your score.

    If however you are carrying balances on other cards this action could cause your debt to credit ratio to exceed 30% which will cause your score to take a hit.

    As far as what you can do about it, it depends on if your carrying balances or not if your not you don’t need to do anything, if you are you can apply for additional cards from other banks to make up the difference.

  3. Reply
    July 31, 2011 at 6:21 am

    Cutting credit limits reduces your credit score in that it effects your ratio of debt to available credit, which is a large part of your credit score. To fight back you can call them and state your case and threaten to close the account. Unfortunately, with a zero balance they don’t make a lot of money off of you so they may not be as motivated to help you. Since you do have excellent credit, you may consider moving the account to another bank.

  4. Reply
    July 31, 2011 at 7:00 am

    No that does not affect the credit score although it affects your credit worthiness or how much you could be given or the max amount you have. Now what affect your credit score are several things:
    1. The percentage you use from your available credit score as revolving credit.
    2. Not paying your bills on time etc.
    In the other hand if you would have owed 25K from the 80K that means that would owe 31% which is not that bad but let’s say your credit is reduced to 30K and you continue owing 25K that means you have used 83% of your available credit and that is what affect your credit, also they consider the revolving credit which is how long you stay with the debt, how you pay it and other things.

    So the answer to your question. Not this does not affect your credit in your case cause you don’t owe anything. And anyways it is on your credit that you had that amount or that you were Worth this much anyways.

    I have being banking with Bank of america and they increased the credit every month they have not dropped it at all. Neither Amex Blue. But I heard some people this has being done.

  5. Reply
    stan c
    July 31, 2011 at 7:49 am

    As long as you’re current on the accounts, it will not effect your credit score. A credit score is based on how well you pay your accounts.

  6. Reply
    July 31, 2011 at 7:54 am

    Present recession has forced many a bank to lower the limits of thier existing customers.
    If your credit rating is good, with no defaults or delays, and you have your job security – your application to the said Bank to review the limit upward will be reconsidered.
    Give them your latest
    financial status/holdings/savings/insurances/movable assets/ non movable assets with latest Salary details if employed – from your employers.
    Present a Case paper justifing your needs for higher limits and on merits your limits have every chance of being upgraded.
    Hope you have not paid your Credit card monthly Bills in installments as is the permissible system in operation but that creats a negative credit rating in the eye of a Banker.

  7. Reply
    July 31, 2011 at 8:16 am

    You still have 100% of your credit card limit to use so if anything this move could help your credit score by reducing the amount of unsecured debt that you could generate. Remember to keep your card active charge on it once a quarter then pay it off.

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