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Reduced credit card limits could keep you from refinancing your mortgage, according to a Dec. 14 article in The Wall Street Journal.
The WSJ cited slashed consumer credit card lines and subsequent plummets in consumer credit scores as factors impeding homeowners from refinancing their mortgages.
Banks charge high closing costs on customers with less than stellar credit and a lower credit score due to slashed credit card limits could knock a consumer out of the refinancing race, the WSJ reported.
Wondering how lowered credit card lines can hurt your credit score?
Your credit score considers how much of your revolving credit lines that you use every month. This is called a credit utilization ratio. The higher your credit utilization ratio climbs, the lower your credit score dips.
A severely reduced credit card limit can push up your credit utilization ratio, reducing your credit score. And several reduced credit card lines could cause your credit score to take a tumble.
So be sure to keep a close watch on your credit card limits. The Credit CARD Act does not require issuers to give 45 days' advance notification for credit limit decreases. So you'll want to monitor credit card lines each and every month.
If you're thinking about refinancing your mortgage, be sure to check your credit score. The Bankrate.com FICO score estimator makes it easy.
If your FICO score is lower than you'd like, you may want to pay down your credit card debt prior to refinancing your mortgage.
Shocked by how much your credit card issuers have cut back on your credit lines? Here are six smart ways to manage reduced credit card lines.
