If I ask my credit card company to lower my line of credit, would this adversely affect my credit rating? – Lawrence


According to Fair Isaac Corporation, the ones who invented credit scoring and whose model is widely used, what you owe makes up 30 percent of your credit score. That’s important because part of the “what you owe” component of your score relates to the ratio of your balance to your available credit lines. Thus, if you have outstanding credit card debt and reduce your limit, you could negatively impact your credit score because you’d be driving up the credit utilization ratio. If you have a major purchase in the works, this could be a bad thing. On the other hand, if you don’t typically carry credit card debt, reducing your limit may not be a big deal. We think it’s important to ask yourself why this is important to you. If you’re reducing your limit to keep yourself from adding debt, it may make sense. On the other hand, if you manage your credit responsibly, it’s probably unlikely to have a big impact one way or another.