Credit Score Tightening

Yesterday, TransUnion, one of the big-three credit bureaus, unveiled an enhanced form of credit score that could make it more difficult for some Americans to obtain credit cards. According to TransUnion, credit bureaus traditionally calculate credit scores using four main forms of historical data:

  1. Past delinquencies
  2. History of responsible use
  3. Debt level
  4. Utilization (the proportion of your credit limits that you actually use)

However, the company is now able to offer–in partnership with ID Analytics–a fifth dimension based on people’s “stability.” And it claims that this additional perspective can, in some circumstances, reduce bad credit decisions by up to 46%.

Credit Card Debt Problems Down Again

Also yesterday, Moody’s Investor Services published its monthly survey of credit card charge-offs, which is industry jargon for the balances that credit card companies write off because they think the debts have become noncollectable. That doesn’t, of course, mean that nobody will try to retrieve the money; anyone whose balance is charged off should expect to hear fairly soon from a collection agency.

The first bit of good news is that Moody’s says that charge-offs on credit cards in May fell for the second month in a row. Jeff Hibbs, an analyst with Moody’s, says that the company believes that “…credit card charge-offs have passed their peak levels of this credit cycle.”

Credit Card News–Things Are Getting Even Better

The second piece of cheerful credit card news to arise from the Moody’s report concerns delinquencies, which are overdue payments on balances that are yet to be written off. In May, these fell to their lowest level since November 2008. Early stage delinquencies (accounts overdue by 30-59 days) were even healthier, and the company says: “The rate is approaching its historically low ranges of 2006-7.”

All of this suggests that fewer Americans are getting into trouble over credit card debt. And that has to be a welcome thought for card holders, credit card companies, and anyone who cares about the health of the U.S. economy as a whole.

Prepaid Credit Card Swipe Fees to Be Unregulated?

Regular readers may recall that legislators on Capitol Hill are currently deciding whether to regulate “swipe” (or “interchange”) fees, which is the cut taken by credit card companies and payment networks every time a merchant swipes a card. A House-Senate conference is currently hammering out the details, but it appears that lobbyists have won a concession over plans to limit swipe fees on prepaid credit cards–as they’re oxymoronically called.

Earlier today, the Washington Post reported that the conference had decided not to regulate these fees, mainly because to do so could harm poor users who often receive state benefits through fee revenue. If swipe fee revenues are reduced, issuers might make up the difference with higher fees for users.

Credit Card Use Without the Credit

As discussed in previous columns, prepaid credit card use can prove expensive because they often have high fees. However, if chosen with care, prepaid cards can provide a convenient payment method for those for whom traditional credit cards are not appropriate.

One such group is teenagers, and Discover offers a useful product that’s tailored for the young, the Current by Discover Teen Prepaid Debit Card. Other groups include those who cannot–or do not wish to–access mainstream cards. People in that position could check out the ACE Visa Prepaid Debit Card or The Mango™ MasterCard® Prepaid Card.

Most popular / best credit cards according to IndexCreditCards.com visitors:

  1. 1. Discover® More Card – 0% APR on balance transfers for 12 months & 6 months on purchases, 5% cashback bonus in popular categories, up to 1% cashback bonus on all other purchases
  2. 2. Chase Freedom Card – 0% Intro APR and no Annual Fee, 5% bonus cash back in popular categories , 1% cash bank on everything else
  3. 3. Citi® Platinum Select® MasterCard® – 0% on purchases & balance transfers for Up to 18 months, APR as low as 9.99% variable. $30 statement credit.
  4. 4. Blue Cash® from American Express – Earn up to 5% cash back on gas, groceries and drug store purchases, and up to 1.5% back on all other purchases, no annual fee, fast approval under 60 seconds
  5. 5. Slate SM from Chase – 0% Intro APR, Now with Blueprint, patented fraud protection

  6. 6. American Express® Gold Card – 10,000 American Express Membership Rewards bonus points when you use the card for at least $500 in purchases within the first 3 months.
  7. 7. TrueEarnings® Business Card from Costco & American Express – 4% cash back for annual gas purchases up to $6,000, 3% restaurants, 2% travel, 1% everywhere else, 0% APR on purchases for first 6 months

Similar Posts:

Share