Does having your credit limit lowered on a credit card lower your credit rating?

My credit limit was $5400 on credit card and it was lowered to $540 due to the bad economy. I would like to close the account since it was unfair to have it lowered that much. I heard it lowers your credit rating. Would it be worse to close the account or keep it open even if it affects my credit rating?|||Having your credit limit lowered will only lower your credit score if your credit utilization goes up. So if you owe them $540 and your limit is $540 and it is your only credit card, your utilization is 100% which is awful. As far as closing the account on the basis of them lowering your limit, that would affect your credit history length which is also bad for your credit. I would pay it off and NOT CLOSE it especially if they are not charging you an annual fee. When the economy turns around they will increase your limit again. Don't worry|||About a third of your score is based on the ratio of credit card debt to limit. If your limit goes down, the debt percentage would increase. Carrying balances of more than 30% hurts your score, 50% takes a big bite, and 90% kills it. If you don't carry balances on any credit cards, lowering the limit will make no difference to your score.





Closing the account would further lower your overall limit. Also, closing your oldest account would hurt your score. Closed accounts still show on your report for about 10 years, but don't count as much in your score calculation.





Many credit card companies are drastically lowering limits and increasing interest rates. If the account doesn't have an annual fee, just leave the account open for now and use it every 6 months or so to keep it active.





If you do opt to close the account, do it via letter and request written confirmation that the account is closed and 0 balance. Keep this in your "forever financial" file.|||Both instances hurt your score but closing the account will hurt more. Anytime your available credit goes down, so does your credit score. When your limit got reduced that took one hit to your score. By closing the account completely, you will take another hit because your available credit amount will decrease by another $540. Best thing to do it to keep the account opened and paid off!|||If you close your credit card account it only affects your score minimaly.. so I would close it out. Your credit card company will send you a letter that states you closed the account. Forward that to all three credit reporting agencies (equifax, transunion ... I forget the other one)