The ?Follow Me Down? Phenomenon

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Paying off debt is a good thing. You pay off your debt you no longer have to worry about payments, late or otherwise. You have the peace of mind of knowing that you are living within your means. Living debt-free is easier all around.

And there was a time when paying off all of your debt meant that your credit score would go up.

And it still might. Paying off your debt may increase your credit score.

But it may not.

Unfortunately, in the current economy, credit has been more difficult to get. At the same time, the banks have felt the repercussions of the easy credit of the past.

Now, many people are experiencing a ?Follow Me Down? phenomenon from paying down their credit cards.

The ?follow me down? phenomenon is when a customer pays down the balance and in turn the bank decreases their credit limit.

Unfortunately, if your credit limit is decreased you will see no positive change in your credit score if you pay off debt.

There are ways that you can try to protect yourself from the ?follow me down?. However, these are just recommendations and suggestions, following this advice will not guarantee that you won?t experience a ?follow me down? but it?s all worth a try.

? Avoid charging excessive amounts or maxing out your credit limits. If you do so the credit card companies? computer algorithms may flag you as a high-risk spender. High-risk spenders are much more likely to have their limits cut.
? Make a phone call to your credit card holder prior to paying off your balance. Ask them directly if you are at risk for getting your credit limits cut. Communication does not guarantee anything but it can still work to your advantage to ask questions and be aware of their plans if possible.
? Always pay on time. If you are late by even one day the banks may be more likely to decrease your spending limits. Banks will always favor their most steadfast customers.

Do what you can to avoid a credit limit hit but realize that right now it is happening and that even some of the most stellar customers have experienced credit limit cuts.