The USA Today recently ran a story on how banks are cutting credit card limits which has the effect of increasing the percentage of credit used as compared to the total available credit and this lowers the FICO score. Here is an example from the article:
Let’s say a cardholder has a credit limit of $10,000 and a balance on the card of $4,000. The card company worries that large balance may increase the prospects for default, so it lowers the credit line to $5,000.
But in doing that, it completely changes what is known as the credit utilization rate, raising it from 40% to 80%. That is then factored into the calculation of one’s so-called FICO credit score, which measures creditworthiness, according to Craig Watts, a spokesman for FICO-creator Fair Isaac Corp.