Credit Card Issuers Circling Subprime Borrowers Again

October 11, 2011
Dow Jones Newswires 
credit card news

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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