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How to keep a small business credit limit from being cut

Summary

Those who rely on small business cards with high limits to keep their shops running need to be proactive.

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Dear Credit Guy,

I’ve been reading for months now about how credit card companies are cutting their customers’ credit limits. I run a small manufacturing business, and I have — and need — a high limit on my business card to keep production going, for marketing, for travel, etc., etc. I try to treat it like a charge card and, with rare exceptions, pay it off every month. If I have my credit cut unexpectedly, it will do a world of hurt to my business. Is there anything I can or should do, proactively, or in my payment and charging behavior that will lessen the odds I’ll have my credit limit cut? Thanks. — Jerry

Dear Jerry,

That’s a great question in the current banking environment. Jerry, I would encourage you to keep several things in mind to assure that you have access to the credit that you need with your business:

  • Check your credit reports from all three of the major credit bureaus — Equifax, Experian and TransUnion — and assure that all information is accurate. Dispute any inaccurate information with the bureau that provided the information. If you have any accurate negative items on your reports, take the action necessary to minimize the affect of the item on your credit score. For example, pay any past due balances, etc. Your goal is to put your best credit foot forward so if you need to apply for additional credit, you will have the best opportunity to qualify for the credit you need and can afford. See the CreditCards.com interactive credit report if you need help understanding how to decipher them.
  • Of course, make all payments on time.
  • Consider applying for an additional business credit card account or a line of credit with your local bank or credit union. Although lending standards may have tightened up substantially, having a business relationship with a local banker is, shall we say, “priceless.” Opening an additional account now will help you avoid any disruption in your business should your credit limit be reduced on your current account.
  • Keep all your credit accounts active, including any new accounts. Creditors are also closing inactive accounts as well as decreasing credit limits. Charging as little as one tank of gas a month and paying it off  when you receive your statement will keep the accounts open and active.
  • Communicate with your creditor if you do receive a notice of a decrease in your credit limit. Ask for the reason they are decreasing your limit.  Let your creditor know that you need the full limit to conduct your business. The creditor may or may not be willing to work with you. You can always ask to speak to a supervisor if you don’t get satisfaction from the person who answers your call.

Jerry, your situation proves once again how important it is to monitor your credit profile and pay all of your obligations on time when things are good.  By taking care of business during more profitable times, you should be able to weather the storm when things slow down.

Remember,

Take care of your credit!

See related: Lending crisis leads to slashed credit limits, As credit lines dry up, small businesses turn to credit cards, Use it or lose it: Issuers quick to close dormant accounts, Interactive guide: How to read, understand your credit report

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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