Some people are finding it harder to get a mortgage these days … because of their credit card company. Why? Because credit card companies have reacted to the recent economic downturn by reducing many cardholders’ credit limits and cancelling inactive cards. The companies’ goal is to reduce the risk of non-payment.

The problem is that whether you can get a mortgage – or how good the terms of that mortgage are – depends to a great extent on your credit score. And a major factor in your credit score is the ratio of how much you’ve borrowed to your available credit. When a credit card company cancels a card or slashes your credit limit, it increases this ratio, which can in turn lower your credit score.

Banks have been getting stingier for a while. Even in the second quarter of 2008, almost two-thirds of U.S. banks said they tightened their standards for credit card loans. And the situation appears to have gotten worse since.

Here are some “alarm bells” that can cause a bank to lower your credit limit:

• Living in an area with worsening unemployment or plummeting home values.
• Suddenly charging necessities to a credit card, such as groceries, utility bills or insurance premiums.
• Running up high balances, taking cash advances, sending smaller payments, or not paying the bill in full when you have a history of doing so.

Of course, you can’t do much about the place you live in. But if you’re concerned about your credit score, it’s a good idea to avoid the other “alarm bells” above.

It’s also a good idea to make an occasional small charge to your inactive cards, just to keep them active. And if your company does reduce your credit limit, call and ask why, and see if you can talk them out of it.

Note: If you have a “rewards” card and you regularly charge groceries and other necessities in order to get a card benefit, you don’t need to stop. What the companies are concerned about is a sudden change in your typical habits.