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Lenders Now Looking For Higher Credit Scores

By Sally Maison
Published: Saturday, February 13th, 2010

It has been going around in the news that consumers are moving away from credit cards and going to debit cards. A lot is being said about the new, more savings-focused and less credit-hungry spending habits of American consumers. That sounds good but there may be another equally weighty factor in the trend. It may be that consumers are just moving away from credit and finding other means to get a hold of convenient spending options – such as debit cards – because credit card companies are limiting the availability of credit.

Lenders Now Looking For Higher Credit ScoresCredit card companies are cutting back on their credit lending, doing so by setting higher credit score requirements for credit scores. While in November of 2007, consumers with a 760 credit score and above could easily get credit with a limit of approximately $8,000, in 2009, if their credit application is approved, consumers could only expect to get a credit maximum of $4,500. this is according to the credit trends report of Equifax last January, 2010. Also, in 2007, consumers with a credit score of around 660 could receive a credit limit of $4,000. In 2009, just two years later, their credit limit would only be $2,500.

Cutting down the available credit of credit holders is not the only way that credit card companies are limiting their credit availability. They are also holding back their credit card issuance from consumers with low credit scores and shifting their credit card approvals towards consumers with much higher credit scores compared.

Nowadays, consumers need a much higher credit score to secure a credit card compared to two years ago. During November of 2007, 40.5% of all the new credit cards being issued were going to consumers whose credit scores were below 660. In November of 2009, only 23.7% of these consumers could secure credit cards. The majority of new credit cards being issued were going to consumers with scores that were at 660 or higher. Specifically, of the new credit cards being issued in 2007, 59.5% were going to consumers with credit scores of 660 or higher. By November of 2009, that percentage had gone up to 76.3%.

Credit card companies are not only cutting down on available credit limits, they are also cutting down on credit card issuing altogether. Compared to figures from November of 2007, credit card issuance was down by 54.5% during November of 2009. Whereas 64 million new credit cards were issued last November of 2007, in November of 2009, only 29.1 million were released according to the trend report of Equifax.

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