With cautious lenders trimming credit seemingly everywhere these days, it's important for consumers to hang on to the credit lines they already have. Not only does a reduced credit line limit your spending ability and financial flexibility, but it can also dent your credit score: a third of your score is based on how much of your available credit you're actually using at any given time.So if you're one of the many credit card customers who've seen their credit limits cut unexpectedly, don't just settle for a lower credit score and a smaller safety net. Here are a few steps to take to get that credit back. 1. Know Thyself. It's clear that consumers are reducing their credit card debt -- revolving debt dropped 5.4% in the fourth quarter of 2008, according to the Federal Reserve. But some lenders, including Citibank ( C), Bank of America ( BAC) and American Express ( AXP), are trimming the size of consumers' credit lines even as balances drop. Companies are trying to reduce their risks in this difficult economic climate. So the first thing you should do is check to make sure your "risk" hasn't changed. 2. Get Your Credit Report. Order your credit reports from AnnualCreditReport.com. Mistakes on your reports or new information that has appeared in error could be the source of your credit card company's sudden change of heart about your risk profile. "You may want to consider ordering your credit score from myFICO.com," say Linda Sherry, director of national priorities at Consumer Action, a non-profit consumer advocacy group. "That way you'll have a good idea of where you stand."
3. Call Your Lender. "If you've been on time with your payments, and paying more than the minimum, you're a good customer and they would be hard pressed to justify their decision," says Sherry. Ask to revisit the information on your account, she says, especially if the issuer could have outdated income information that doesn't reflect your current salary. 4. If Necessary, Take Your Business Elsewhere. If you credit card company won't help, consider taking your business elsewhere. There are still plenty of balance transfer cards available to consumers with good credit; BankingMyWay's Credit Card center has some of the most attractive offers out there. While it might be tough to transfer a balance of $10,000 or so, you shouldn't have much trouble with a balance in the $2,000 range. 5. History Is Important. Even if you transfer a balance, make sure you don't close the account once the balance reaches zero. Even with a very low credit limit, an account that dates back a number of years can have a positive impact on your credit score. "Length of history is another important component of a credit score," says Sherry. "So rather than closing the account, pay off the balance and keep the card around, using it once a month and paying it off in full each time." Inactive cards are more likely to have their limits lowered. So long as your situation hasn't changed, you have every right to demand a reason from the credit card company for their decision to lower your limit. And if your situation has changed, such as carrying higher balances, a drop in income or a few late payments, then consider sitting down with a debt counselor to help keep your lower credit limits from hurting you even more. (For a list of debt counselor's near you, head to the National Foundation for Credit Counselor's website.