Banks Loosening Credit for Subprime Consumers

Friday, June 29th, 2012

Good news for those with less-than-perfect credit scores: banks are finally opening the lending doors for subprime consumers.

But banks don’t seem to be blindly plunging into lending to the consumers who can’t afford the debt they are taking on. Lenders are making smarter decisions: they strict criteria in opening credit to these consumers.

Usually banks price bad and mediocre accounts much higher than those with perfect score. That’s also tied to the credit card legislation that prohibits card issuers from raising rates for the first year in which the account was open.

High-risk consumers, or those whose credit scores are below 600, are still a huge cause for risk concern. Typically, people with poor credit scores fall into two categories. The first is for those who destroyed their scores themselves by missing payments, exceeding limits, filing for bankruptcy and any other financial disorder. The second is for limited credit histories, such as students and new immigrants.

When the recession hit and jobs were axed, hundreds of people who once had great, even acceptable personal financial management skills saw their scores swoop as money misery piled up.

Today the credit score between 620 and 659 is generally considered as an ‘average’ credit score when in previous years it would have been considered as a ‘poor’. The credit-card issuance to such consumers jumped 21% in the first quarter compared with the same period a year ago and the amount of credit extended for consumers in that credit score range is on the rise as well (according to Experian).

It seems that banks understand that many Americans suffered for years from high unemployment and depressing economic outlook. For example, as banks look to new sources of revenues, they are more understanding of consumers who lost jobs and ruined their credit scores in the process but are working to improve them.

Now, as banks are more financially stable, they coupled with the Federal Reserve’s promise that interest rates won’t inch up before 2014. Also the default rates have dropped considerably for those in the 700-range.

Competing for market share the lenders prompted to relax some underwriting criteria and now those people who were trapped between prime and subprime are the ones who are seeing the benefits of loosening credit.

Latest No / Limited Credit Card News

Friday, August 19th, 2016
The Consumer Financial Protection Bureau (CFPB) is considering a proposal that would change the way debt collectors operate in the United States. The new guidelines would limit ...
Thursday, March 17th, 2016
Ever since the economic crash of 2008, banks have tightened their lending standards, leading to less available credit for Americans.
Friday, October 16th, 2015
A recent report shows that co-branded credit cards accounted for $809 billion in purchases last year.
Wednesday, July 2nd, 2014
People can establish good credit when they properly manage their loans and credit cards, but it can be difficult to get a loan or a credit card if you don’t have credit or your ...
Tuesday, May 21st, 2013
Is it bad if a high school graduate wants a credit card? The experts say it depends on the child and how he or she considers the card. If children think of credit card as of ...
Best Credit Offer
Click the Compare link to compare the checked cards side-by-side at the comparison table.
Consumer Rating: 4 / 5
Pacific Credit Group Emporium Black Card
Copyright © 2001-2016 All Rights Reserved.

* The webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the website are property of their respective owners. makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that may be compensated by the credit card issuers when the readers apply for a credit card through this site. is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. does not review or list all available financial or credit offers.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.