Credit Crunch

An interesting thing happened to me today. I received a letter from my credit card company announcing that my credit limit had been cut in half. Now this was a bit surprising to me because:

1. I have had this card for 11 years. My parents gave me this card (i.e. cosigned on it) when I went to college to help me establish my own credit. When I got my first job I had them removed and the card listed solely in my name;
2. I have NEVER missed a payment on this card...EVER!
3. I have always remained under my credit limit;
4. I have RARELY (i.e. twice in 11 years) carried a balance from month to month;
   

So WHY did they do this? Well, this card is through AAA (American Automobile Association). Why did I get a VISA through AAA? Because that's what my parent's gave me...but why did the card company lower my credit amount? Simple, the card is through Bank of America. Have you seen what's been happening to them? So, they want to make sure that they do not have too much "exposure" in the future and so they are lowering their customer's credit lines.

Now this is NOT that big a deal for me. I don't need that much credit available all the time...but...do you know what it will do? It could possibly reduce MY credit score!

How? Well, one of the factors in determining your credit score is how much of your TOTAL available credit you are using. The more you are using, the lower you score because you are "over extending" yourself.

Now NOTHING has changed about my financial situation. Not decrease in income. No great increase in debt. And yet, by reducing this credit amount, my score may be affected.

So...I thought I would put it out there for a poll (see to the left) and find out what, if anything, your credit card companies have "changed" about your account lately. Check back often for results!