Subprime Borrowers, Credit Cards and the Chicago Housing Market

mortgages and credit debtIn some areas of lending, it looks like the banks may be loosening their tightly guarded purse strings at last. The trends show that some lenders are now taking bigger risks, issuing credit cards to subprime consumers – or those with credit scores below 660. That could mean that lenders will also start making it easier to get home loans and purchase Chicago real estate.
The good report comes in a post entitled, “
Credit Trends: Signs of Life From Subprime Customers.”  Written by credit expert Janet Dedrich, it recently appeared on the
Equifax Personal Finance Blog. Dedrich reports on trends that show a 34 percent increase in new subprime credit cards in July 2010 over July 2009. While the numbers are encouraging, the totals are still only about 30 percent of the 2.5 million subprime originations in July 2007.
This increase illustrate that underwriters for both retail store credit cards and general purpose credit cards are relaxing their scoring. Subprime borrowers now hold 26 percent of all general purpose credit cards, up from 22 percent one year ago. Similarly, subprime borrowers hold 26 percent of retail store cards, up from 24 percent last year.
It’s not just the subprimers who are accessing more credit, though. The total number of general purpose credit cards increased 12.8 percent from July  2009 to July 2010. This number is growing faster in 2010 than it did in 2009.
While the signs are promising, Dedrich is still concerned about people with lower-incomes than these subprime borrowers. To read her full analysis, post your comments or ask questions, visit the
Equifax Personal Finance Blog.