CNN Now Reporting What I Told You a While Ago - AMEX Is Cutting Credit Lines

Finally the word is getting out to the public about this. CNN reported that AMEX is cutting credit lines. And although it was just AMEX they mentioned I know Chase credit card limits are being reduced as well as the AT&T Universal Card.

The issue here is not just the sudden disappearance of your credit, which is unnerving enough, but as they cut credit lines to just what people owe on the cards it becomes an issue for FICO scores. FICO scores are heavily weighted to the percentage of credit you have outstanding to your total available credit. With the reductions you could easily go from 30% to 100% usage which is going to lower your FICO score. A friend's AMEX was reduced from $25,000 down to the $8,000 which he currently owed. Several of my cards have been lowered to just what I owe creating 100% credit usage.

And the question in my mind is how often they will keep reducing it. If you make a large payment will they reduce your credit line even more next month? In my mind it's a Catch-22 situation. The more they reduce credit lines the lower everyone's FICO scores will go, which will make them reduce your credit even more.

So if you are one of the few people who are actually buying a home right now if you were pre-approved then your credit lines were dropped you may see your FICO score lowered and the mortgage loan approval evaporate. So this isn't just about credit cards, it's another big hit to the housing market.