Avoid Credit Limit Decreases On Your Business Credit Card
Over the last few years a lot of business owners have reported sudden decreases in their credit lines. As alarming as it can be for consumer cards it is even more so when it happens to a business owner who might be depending on the credit line to ensure the efficient operation of the business. Lenders slash credit limits mainly to prevent cardholders who they deem as risky from racking up too much debt on the card.
Below are a few tips for avoiding a sudden decrease in your credit card limit.
Check your business credit reports at the business bureaus and while you're at it check your personal credit reports at the three major bureaus also. Your business credit may be linked to your personal credit and they might be affecting each other in adverse ways. If you spot any accuracy on any of the reports do whatever is necessary to get it resolved as quickly as possible. There might also be negative reports based on your actions like late payments, overdue accounts and maxed out credit limits. Take the necessary actions to fix these delinquencies so that you can get back on the right track with your business and personal credit. Moving forward make sure that your payments are on time and pay down your balances to reduce your credit utilization.
If all else fails it helps to have a source of backup funding in case your credit limit is decreased suddenly or completely shut off. It might be much harder to apply and qualify for another card but it is worth a try if it means the continued smooth running of your business. You can improve your chances of approval by searching for the best business credit cards with less restrictions or perhaps applying for it you're your local banker with whom you might already have a good relationship with. Remember this card should be used as a backup not as an opportunity to rack up further credit card debt.
It is important to maintain activity on all your accounts since creditors are also taking a stab at inactive accounts by closing them down completely. If you do not want to rack up debt you can charge office supplies or some other business expense to the card and pay off the balance when you receive the statement. This will in effect indicate to the lender that the account is still an active account.
Every consumer feels a sense of relief and pride when they have the resources to make a large payment that will reduce credit card debt. It should put you in a positive light with the lender but recently this seems to have the opposite effect. Rather than accepting these payments in good faith credit card providers are turning around and slashing business credit card limits after these payments are made. The account is somehow flagged with the large payment and lenders go in and reduce the credit limit. The solution to this is to pay off you balance in small payments in a few weeks rather than paying in a large chunk. This will help you to stay under the radar and avoid having your account flagged.
Try to keep your credit limit usage under 30% of the available credit. You will win the favor of the lender by limiting your spending and showing responsible behavior with the credit line. If you max out the limit on other cards you will increase your chances of a credit limit decrease.
If you notice a decrease in your credit limit call up your lender and find out the reason for the decrease. Let them know that the decreased limit will have an adverse effect on the way that you conduct business and work with them to negotiate a way to maintain your current limit. Be willing to escalate the issue to a manager if necessary in order to get a reasonable response. If this does not work you will need to resort to your backup funding or find creative ways to make your new reduced limit work for you.
If you have not had the misfortune of a slashed credit limit you should take action to prevent it by being alert and responsible with your finances and credit.
Below are a few tips for avoiding a sudden decrease in your credit card limit.
Check and Fix Any Errors On Your Credit Report
Check your business credit reports at the business bureaus and while you're at it check your personal credit reports at the three major bureaus also. Your business credit may be linked to your personal credit and they might be affecting each other in adverse ways. If you spot any accuracy on any of the reports do whatever is necessary to get it resolved as quickly as possible. There might also be negative reports based on your actions like late payments, overdue accounts and maxed out credit limits. Take the necessary actions to fix these delinquencies so that you can get back on the right track with your business and personal credit. Moving forward make sure that your payments are on time and pay down your balances to reduce your credit utilization.
Get Another Business Credit Card To Serve As Backup Funding
If all else fails it helps to have a source of backup funding in case your credit limit is decreased suddenly or completely shut off. It might be much harder to apply and qualify for another card but it is worth a try if it means the continued smooth running of your business. You can improve your chances of approval by searching for the best business credit cards with less restrictions or perhaps applying for it you're your local banker with whom you might already have a good relationship with. Remember this card should be used as a backup not as an opportunity to rack up further credit card debt.
Keep Your Credit Card Accounts Active
It is important to maintain activity on all your accounts since creditors are also taking a stab at inactive accounts by closing them down completely. If you do not want to rack up debt you can charge office supplies or some other business expense to the card and pay off the balance when you receive the statement. This will in effect indicate to the lender that the account is still an active account.
Beware of Large Payments
Every consumer feels a sense of relief and pride when they have the resources to make a large payment that will reduce credit card debt. It should put you in a positive light with the lender but recently this seems to have the opposite effect. Rather than accepting these payments in good faith credit card providers are turning around and slashing business credit card limits after these payments are made. The account is somehow flagged with the large payment and lenders go in and reduce the credit limit. The solution to this is to pay off you balance in small payments in a few weeks rather than paying in a large chunk. This will help you to stay under the radar and avoid having your account flagged.
Don't max Out Your Business Credit Card
Try to keep your credit limit usage under 30% of the available credit. You will win the favor of the lender by limiting your spending and showing responsible behavior with the credit line. If you max out the limit on other cards you will increase your chances of a credit limit decrease.
Call Up Your Lender
If you notice a decrease in your credit limit call up your lender and find out the reason for the decrease. Let them know that the decreased limit will have an adverse effect on the way that you conduct business and work with them to negotiate a way to maintain your current limit. Be willing to escalate the issue to a manager if necessary in order to get a reasonable response. If this does not work you will need to resort to your backup funding or find creative ways to make your new reduced limit work for you.
If you have not had the misfortune of a slashed credit limit you should take action to prevent it by being alert and responsible with your finances and credit.
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