Credit Card Limits Could be Based on Where You Live
Did you know that your credit card limits could be affected by where you live? Some of my clients have had their spending limits reduced on American Express cards and have inquired with the company. You might be shocked to hear some of their reasons for the reduction:
“Our credit experience with customers who have made purchases at establishments where you have recently used your card.”
“Our analysis of the credit risk associated with customers who have residential loans from the creditor(s) indicated in your credit report.”
Rumors about such reasoning have been floating around for years, but we’re now seeing it cited as criteria for a credit limit reduction. A consumer researcher I saw quoted in an MSNBC article confirms it, “There’s no question that this type of behaviors [scoring] is used by everyone. They just don’t like to admit it.”
So bottom line is, your credit history is really only a part of what determines how you get to use a credit card…it’s also based on how others are using credit. That’s why using a credit card responsibly, I think, is getting harder and harder. To come out on an even playing field or win the financial games you play, you have to at least know the rules ….but how can you know the rules when the card companies are arbitrarily deciding, mid-game, to change them?
My advice is to be pretty picky about which cards you hold and be VERY careful in using them. Don’t carry balances, and if the company begins to change the rules mid-game, consider getting out.