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Tarnished Credit Report Major Road Block for Card Aspirants

By Faye Mergel
Published: Thursday, October 15th, 2009

Market analysts note that shopping for credit card is not as simple as it used to be. Card issuers have drastically raised their lending standards at the height recession and during the initial implementation of new credit laws. Now that US economy crunch is easing, lenders are already less strict but only to a minimal degree. They still prefer dealing with clients who have excellent credit reports, refusing to risk profits by filling up their clients list with people who have below average consumer reports. Experts add that creditors are no longer that generous in giving card offers, as could be attested by fewer mails sent to consumers.

Tarnished Credit Report Major Road Block for Card AspirantsNew consumer protection laws, otherwise known as Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) made lenders fear about their profits. Tighter regulations will decrease their earnings significantly so they aimed at minimizing losses by decreasing risks. That is why they have stricter standards when it comes to credit approval, scrutinizing every consumer’s report and immediately rejecting those who do not meet their standards. Lending companies say this will keep them from losing huge money through defaulted deals.

Last year, card offers went down by 71 percent which signals the more meticulous criteria by lenders. This is year, it is expected to sink by 60 percent with only 1.5 billion credit card invitations expected to reach consumer mailboxes. Analysts say if borrowers do not show nationwide improvement in credit reports, lenders are likely to snob potential profits from them.
Tweaked credit card policies, reduced debt limits, and decrease in reward deals (such a gasoline cards) all show that lenders are still reluctant in giving clients their pre-recession privileges, experts add. Analysts emphasize on keeping credit reports free from blemish since it could save consumers hundreds of dollars and could assure them a loan when they need it most.

Experts say that people who practice better debt management often pay 8 percent lesser interests than those who have tarnished accounts with the bureaus. They add people who have not kept their credit reports clean can still get a new card. But experts say they should expect fees associated with poor debt standing which may not make getting a new card worth it. Specialists advise consumers to clear their credit reports from errors and negative items before applying for another card so they can get the best deals available. Consumers are also advised not to rack up too much debt, especially that US economy has not yet regained its previous vigor.

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