Hoping to improve a poor Community Reinvestment Act grade, Chicago's Uptown National Bank has launched a credit card program for borrowers with shaky credit histories.

In an unusual arrangement, the bank has set aside $100,000 to back Visa cards that will be offered by a unit of Harris Bankcorp. Uptown is offering the cards - with $300 to $2,000 credit limits - to low-income and moderate-income borrowers.

In most cases, applicants will be required to open a savings account at Uptown. Uptown receives a nominal portion of the program's profits, with the bulk going to Harris.

A |Needs to Improve' Rating

Last February the $185 million-asset Uptown received a "needs to improve" rating on its CRA examination. The Office of the Comptroller of the Currency told the bank that it "needed to have a small-loan product and suggested we start a credit card division," said community reinvestment officer Steve Olson.

Instead of going to the expense of launching its own credit card unit, the bank decided to act as an intermediary between borrowers and Harris. Uptown has relied solely on media coverage and word of mouth to market the credit card.

So far Uptown has received 30 applications and issued 15 cards with an average credit limit of $1,000. Only five applications have been denied.

Annual household incomes in Uptown, a racially mixed community, are below the national average. Minorities make up more than 60% of the neighborhood's population.

|Way of Answering a Need'

"We saw this as a way of answering a need in the community for smaller dollar amount loans and as a way to help people establish legitimate credit histories." said Mr. Olson.

By helping borrowers establish banking relationships, the bank may be nurturing future customers for car, home equity, and mortgage loans, he said.

Because the program addresses a stated need in the community, the bank expects to receive CRA credit. Community groups have praised the credit card program, and want to funnel prospective borrowers to the bank.

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