At what point do creditors cross the line? It’s pretty obvious that the current financial crisis and economic down turn has began forcing changes in lending practices and policy but there has to be some limitations to what lenders can and should do. In the United States we are losing somewhere around a quarter million jobs a month which is a direct affect of the current recession. In the darkness of this timid economy there is still a very large number of people who are paying their bills and holding their jobs. This brings me to my next question, should responsible individuals be punished for irresponsible borrowing and lending practices?

Just over three years ago I opened a credit account with an online Tire company and throughout those 36 months I have never made a late payment, my balance has never exceeded 50% of the credit limit, and I have always paid more than the minimum payment. Unless I’m being ignorant I would be inclined to think that this account history would put me in the category of a reliable and valued customer. At this point you may know where I’m going with this.

I had a reasonable day yesterday, didn’t encounter any rude customers, didn’t have to flip anyone off on the interstates, didn’t receive any unwanted phone calls, but that all changed when I got home. I received a letter yesterday that struck me as a little odd, it was from one of my creditors but wasn’t dressed in the usual packaging. If you have a stomach that is easily upset please stop reading this article immediately.

The letter started with “as a part of our standard practices, Creditor X has completed a credit review of your Retailer X account and overall credit bureau information.” I knew what was coming but I was really at a loss for words/thoughts. As I read on, “based on a review of your information, your available credit limit has been lowered to $400. Your account remains open and available for use, subject to the new credit limit and will continue to be periodically reviewed.” If that doesn’t make you feel all warm and cozy inside I don’t know what would.

They proceeded to state, “While we look at many factors in making credit limit decisions, the following characteristics were most pertinent to our decision regarding your account: # collection accounts, months since most recent collection account reported, and the age of oldest bank card trade.” Here’s a dash of humor, all of my credit accounts have been opened for at least three years and the only change to my credit report was a medical collection for under a hundred dollars.

Realistically I don’t need this credit account and I will be closing it very soon out of spite but does three years of perfect payments not buy me a little bit of respect? Does the constantly declining economy give creditors the right to disrespect their customers? Here’s the reality though, this could be a lot worse. What if I had a balance over $400? What’s to stop them from nailing me with the default rate for going over my credit limit? And really, whats the point of risking a reliable customer by dropping their limit by $600? The bottom line is that these creditors are attempting to reduce their risk by cutting down credit limits therefore reducing the possibility of consumers defaulting on their accounts. Correct me if I’m wrong but shouldn’t they start with people who aren’t making their payments?

Do any of you have a similar story, or a story that will make me feel better about my situation?

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