The Debt-to-Limit Scam, by 720 Credit Score
Have I told you how much I LOVE getting letters and emails from people who have been through my program?
I received some feedback a couple of weeks ago from a student who has called into my one-on-one Q&A session. She’d unexpectedly had her credit card limits reduced, which affected her debt-to-limit ratio, which in turn caused her how to save money on car repairs score to drop.
Credit card companies do this regularly—they promise you a big limit, and then a few years later, they lower your limit out of the blue. This hurts your credit score, which is in part based on the debt you carry as a percentage of a limit.
For instance, let’s say you have a $10,000 limit and a $1,500 balance. Your balance would be 15 percent of your limit, which would be looked upon favorably by the credit-scoring bureaus.
But if the credit card companies went and dropped your limit to $2,000, your balance of $1,500 would be 75 percent of your limit, which would be looked upon negatively by the credit-scoring bureaus.
It’s a scam!
Well, this happened to one of my clients, and I told her how to fight back. Then I got this letter (which I’m editing slightly so that you have the complete context):
“I had one card with a limit that had been lowered, and I decided to try for the second time to get it raised because they refused my request the first time. I called, and after spending 1.5 hours on the phone with five or so people (who by the way, got a little more patronizing with each one), they still would not do it.
“But … during the conversation, one of them mentioned something about calling the “Portfolio Risk Department.” After just five minutes on the phone with ONE person in the Portfolio Risk Department, they restored my full credit limit! Done!
“I never would have known to even try this if not for your fabulous program and awesome encouragement! Thank you so much once again!”
At times like this, I love my job more than usual. I’ve said it before: Your credit score is your financial reputation, and I’m tickled pink to help people fight back when their reputations are being tarnished!
With that in mind, let me know if you have any questions about rebuilding your score. From time-to-time, I answer them in my weekly email/blog. Leave a comment below, and I’ll try to answer it in the coming months.