Does Lowering Credit Lines Affect My Ratings?

Question: Until a few years ago, my late husband and I traveled a good deal and maintained a high limit on our credit cards. He has now passed away. I travel far less and no longer have a need for so much credit. I would like to have my limits reduced, but fear doing so would have a negative effect on my credit rating. Is this correct?

 

Answer: Lowering your credit limits may indeed hurt your credit score, the three-digit number lenders use to help gauge your creditworthiness. The scoring formula measures the gap between the credit you have and the amount you actually use. The wider that gap, the better.

 

Unfortunately, there is no way to determine in advance if the lowered credit limit will affect your score, according to Fair Isaac Corp., creator of the FICO credit score.

 

But the damage of lowering limits on a card or two may not be that severe if you don’t use the cards that much and already have a high credit score — which is likely if you have a long credit history, are never late on your payments and don’t max out your cards.

 

If you have reason to think your credit score may be on thin ice, on the other hand, it may be best to live with the higher limits as long as you are confident you can resist the temptation to charge away.