Credit cut to the bone

By Megan McArdle

Another in the flood of stories on people having their credit lines cut  This has nasty repercussions for their credit scores, pushing their balances to 50% or more of their total credit.

As in many of these stories, what's not made clear is why the credit lines are being cut.  The man featured claims to have carefully kept the credit cards he uses to finance his business used at no more than 1/3 of maximum capacity.  This seems like an ideal customer.

But, like many of the people featured in these stories, their Exhibit A is in the construction business.  The companies cutting his credit lines are probably right that it's dangerous to give him too much room to run them up.

This article available online at:

http://www.theatlantic.com/business/archive/2009/03/credit-cut-to-the-bone/1348/