Credit card issuers are knocking on the doors of subprime borrowers again as
they look for ways to grow their business amid heightened competition. The move
is part of a broader effort by banks to lure more credit card customers after
many lenders retrenched from the subprime market. While issuers are still
approaching the market with caution, offering those customers small credit lines
and charging higher rates, experts anticipate the trend will accelerate.
SmartCredit.com's John Ulzheimer believes that more banks will focus on
consumers in the "meaty part of the FICO distribution" range of 620 to 650.
"There are more nuggets of gold in that … score range," he notes, adding that
credit scores have fallen for many Americans due to job losses or other
circumstances beyond their control. Banks issued 5.4 million new credit cards to
subprime borrowers through June, up 64 percent from a year earlier, according to
the most recent data from Equifax.
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