Will a Cut in My Line of Credit Hurt My FICO Score?

by Stacy Francis, CFP®, CDFA

This question popped up during a recent Savvy Ladies empowerment circle. The woman asking it had recently received a letter from American Express, letting her know that they had reduced her credit limit from $17,000 to $9,000. Credit score disaster or a mere annoyance? 

It depends. The three main factors determining your FICO score are 1. timeliness of payments, 2. outstanding debt compared to your total credit available, and 3. how long your accounts have been open. So an $8,000 drop in total credit available can have a negative effect on your credit score, especially if you are carrying revolving balances on one or several cards (fortunately, she does not).  

The damage caused by a cut in your line of credit will be less significant if you have a decent credit score (720 or higher), and a long history of timely payments. If you have fewer credit cards, a shorter credit history or some late payments on your record, it will sting more.

The good thing with the FICO score is that it is not stagnant – the credit reporting agencies are constantly updating it. So when you make timely payments, reduce debt, and keep your old accounts open, your score improves over time. So while it is definitely a setback, having your line of credit cut short is not a major disaster.


Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.