Credit card rate cut request hurts score?

Dear Credit Card Adviser,
If I ask my credit card companies to lower my interest rates, will it affect my credit score?
-- Shane

Dear Shane,
Asking your credit card issuer for a lower interest rate may affect your credit score in some cases.

Such a request could prompt the credit card provider to review the customer's credit history as part of their approval process, Rod Griffin, spokesman for Experian, one of the three major credit-reporting agencies, says in an email.

"That could result in a hard inquiry, which could have a small negative impact on credit scores," he says. Hard inquiries, the type of credit check that can affect your credit score, remain on your credit report for two years, but only factor into the credit score for the first year.

The request might not necessarily trigger a hard inquiry, according to the credit card issuers that responded to my request for information. Representatives of American Express and JPMorgan Chase & Co. told me a rate reduction request from a customer would not generate a hard inquiry, while Bank of America said a hard inquiry might be necessary if more information was necessary to qualify a consumer for a lower rate.

Either way, a temporary dip in a credit score resulting from a single inquiry might be worthwhile -- unless you're in the market for a loan and have a borderline credit score -- if the reduced interest rate helps you pay down credit card debt.

Not that a rate reduction is a given if you ask for it.

Besides your credit profile, your credit card provider may consider your level of spending and payment history on the account. The issuer reserves the right to deny your request or even make a change to your account based on its review.

If you haven't looked at your credit reports recently, I'd suggest doing so to ensure they don't contain any inaccuracies that could alarm your card issuers, such as recent delinquencies. Under federal law, you can request free copies of your credit reports once every 12 months at AnnualCreditReport.com.

To some extent under the federal law known as the Credit Card Accountability, Responsibility and Disclosure Act of 2009, issuers must re-evaluate rate increases. The law requires issuers that imposed rate increases on or after Jan. 1, 2009, to reassess those increases every six months and reduce the rate if appropriate within 45 days of completing the evaluation. If the rate increase was triggered by a delinquency of 60 days or more, it must be terminated if the consumer makes at least the minimum payment on time for the next six months.

In short, the request may affect your score in some cases, but more importantly, the card issuer may look at multiple factors -- not just your credit history -- to make its decision. Make sure you know where you stand, so you can negotiate from a position of strength.

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