American Express Lowers Your Credit Score... With no reason!
Recently American Express has been lowering the credit limits of MANY of their cardholders, and now I have been personally included. Last November 20, (OUT OF THE BLUE), I was notified in an email that my credit limit was being cut down 75%, from $52,000 to $12.500. I could understand if this was being done for a legitimate reason, such as my credit scores dropping, or perhaps been late on any payments. But no, I am not naive in that area (I AM retired automobile dealer FOR OVER 30 YEARS, and very good with financing)... I do know why they are reducing mine and MANY other%u2019s credit limits; I just do not think their reasons are legitimate, fair or even business smart.
My three credit scores are, or (I should say were) around the good/excellent range (760-780), and I do monitor them often so I know they have not decreased (although now they "now" most certainly are). My payments have never been one second late since 1980 (that is 22 years paying to this idiots). MANY other American Express cardholders with similar, if not better credit scores (and a long history with American Express) are also feeling the pinch!
Traditionally American Express has been one of the better management companies in the financial industry. But strategies and decisions like this one are very concerning to me. My credit scores have droppe about 200 points since Amex played the "cute little game" of reducing my credit line!
Obviously American Express%u2019 strategy in this credit crunch, is to reduce risk as delinquencies mount and unemployment rises. They feel that they can do this by drastically cutting credit limits across the board for all types of borrowers. Since many of the American Express cardholders with excellent credit have fairly high credit limits, $20,000 or "more", they have especially been targeting these accounts for 50 or more reductions.
The problem with this strategy is that reducing the limits of those with excellent credit scores does not make sense, especially from a long term outlook. People with excellent credit scores (that included me)! Only have those scores because they pay their bills and obligations on time, consistently, through good times and bad. Which is why they are considered low risk borrowers, "they will pay you back", regardless! Drastically cutting their credit limits will just deter them from using their AMEX, especially if it%u2019s for business purposes and their reduced credit limit can no longer fund their month to month operations with it... That happened to me!
So does American Express think that their most credit worthy borrowers will go on a spending binge, lose their jobs, and stop making payments?
What it Means for You
If this has happened to you, it means that your available credit will be greatly reduced. This also means your debt to credit ratio (debt divided by available credit) will also be reduced. Consequently this also means all three of your credit scores will be reduced as well, within a month or two of the limit reduction. That unfortunately happened to me already, as I mentioned before!
So thank you American Express. As a loyal cardholder, without any late payments, and an excellent credit history, since 1980 I will be sure to remember this in the future and I will be your worse night mare, telling every one what you are doing to good decent people... I have the time!
By The way... I close my Accounts with American Express...
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