Credit card customers could hit future problems

According to a recent report many credit card customers who have recently had their credit limits slashed by their card issuers could suffer financial problems in the future as a result of the move.

Many customers were recently outraged to find that their credit card issuers had cut limits to just £100 over their existing balance.

Industry experts are now stating that these customers could find that their credit profile is affected by the cut, and this could make it difficult for them to get future credit.

This is because lenders look at how close to the limit consumer’s credit card balances are when deciding whether to offer finance.

One industry official said: ‘The credit limit cut does create an interesting conundrum. The credit scoring models don’t take into account limits cut by creditors to minimize their own risks. So a limit cut that leaves the debtor essentially maxed out can only protect the lender and harm the debtor. This seems grossly unfair since the debtor isn’t given ample warning or notice to clear the decks and instead is caught by surprise.’

An official from a credit reference agency said: ‘These changes will show on your credit report and could have implications. Lenders can assess this information any way they wish. If you are only a couple of pounds below your balance that could ring alarm bells.’