Bankruptcy

Reclaim Your Credit: What to Do When Your Credit Shrinks

By Meaghan Olson

As you may already know, credit card companies are responding to the recent passage of the Credit Cardholders? Bill of Rights by slashing limits, raising interest rates and even closing cards for many customers.

Here?s what you can do if one of your card issuers gives your account the ax (or even the pruning shears).

Ask the Right Questions on the Phone

The most important thing to remember is that you don?t have to take changes to your credit lying down.

As soon as you notice altered terms on one of your cards, take action:

• Do your homework. Before calling the credit card company, make sure you know as much as you can about your account: how long it?s been active, your former and current limits, your former and current interest rates, your balance. You?ll be better able to negotiate when you prove yourself knowledgeable about your circumstances.
• Look outside the box for solutions. Be sure to visit www.annualcreditreport.com to get a copy of your credit report before calling. Inaccuracies on your report could lead to changes in your credit card terms and other problems. Take steps to correct any mistakes you find.
• Get an explanation. When you call your card issuer, ask for the reasons your account was altered. Common reasons include account inactivity, increased credit risk or diminished profitability ? regardless, you have a right to know why your terms have changed.
• Show off what you know. Here?s where all your work will come into play: if you?re in good standing with the company, emphasize that and your other positive credit action (as displayed on your credit report).
• Bargain. If your issuer is willing to raise your limit OR lower your interest rate, be ready to accept the compromise. A lower interest rate will likely be best for those who carry a balance; a higher limit may work well for those who pay in full each month.
• Push it a little. If the representative you?re speaking with won?t budge, ask to talk to a supervisor ? as long as you have a reasonable case to support your request.

Full post as published by The Bankruptcy Blog on August 10, 2009 (boomark / email).