Consumer lenders continue to wrestle with a paradox: By all accounts, credit standards have tightened, yet credit card marketing and competition remain intense and default rates are at record highs.

If bankruptcy filings are slowing, it is only in the rate of increase. Credit card chargeoffs and delinquencies are on an uncomfortably high plateau.

Regulators, economists, and analysts are raising caution flags. Doomsday scenarios are being spun in which the economy turns south, unemployment rises, and defaults become uncontrollable.

Bankers say they do not take the warnings lightly and claim they have persistently been taking steps to avert disaster.

Credit card lenders are virtually unanimous in saying they have a firm grip on their exposures, high though they may be. Banks' cardholder credit limits exceeded $1.6 trillion as of Sept. 30, seven times card loans outstanding, said Veribanc Inc. of Wakefield, Mass.

In a recently published survey by the American Bankers Association of 95 card issuers, 80% said they had tightened credit criteria in 1996. Only 10% had loosened them, and 10% left them alone.

Some bank card executives see silver linings in chargeoff trends, which hit all-time highs in the second quarter of 1997 and ebbed slightly as the year progressed. Most expected it would take time for their actions to be fully reflected in credit-quality statistics.

"Most issuers tightened their credit underwriting, and you are starting to see the results of that," said Jeff H. Slawsky, managing director of corporate development at Boston-based Partners First. That company, which manages a $1.9 billion credit card portfolio, is a joint venture of BankBoston Corp., First Annapolis Consulting, and Bank of Montreal's Chicago-based subsidiary Harris Bankcorp.

Mr. Slawsky said Partners First's lending criteria are unmistakably tighter. But he said this does not mean the firm is less eager to attract new customers.

"From the point of view of BankBoston and the joint venture, we were never not aggressive, even when we changed our underwriting standards," he said.

Some of the more skeptical observers see the latest delinquency and chargeoff numbers as evidence that card issuers have not done enough to rein in bad debt. They point to the continued use of aggressive marketing tactics-the bulk mail sent out predominantly by a handful of the biggest issuers-to contradict the claims about tighter credit.

Gary Gordon, an analyst at PaineWebber Inc., said banks also seem to be targeting more customers through telephone solicitation. He said no concrete tracking data was available, but anecdotal information points to an uptick in calls beginning in the latter part of 1997.

One consumer, Mr. Gordon said, received 14 phone calls at home from credit companies-on the same weekend she closed on a new home.

"While consumers cannot afford to grow their debt much more than five or 6%, individual issuers are trying to grow faster than that," Mr. Gordon said. "There definitely looks like there is an increased willingness to lend, and because of that we should see more losses."

BAIGlobal Inc. of Tarrytown, N.Y., which tracks mail solicitations, said credit card mailings fell to 748 million in the third quarter of 1997 from a record 881 million in the second quarter. But it was sure to be a record year, fueled by platinum card offers.

In a report last week, Fitch Investors Service Inc., which analyzes accounts in securitized portfolios, said credit card chargeoffs ended 1997 with seven months of only the slightest improvement.

In December, though, the chargeoff rate actually rose, to 6.84% from 6.66% in November. Fitch said much of the reason for that was an accounting policy change at Capital One Financial Corp., which became stricter about chargeoffs in the fourth quarter. Capital One now charges off card loans at 180 days past due, instead of one billing cycle after that.

Fitch said just over half the credit card issuers it follows reported lower chargeoff rates in December. First Chicago NBD Corp. and Citicorp showed the most improvement.

The ABA card report, which included information through the first half of 1997, said banks seemed to be adding loans to their books at a slower rate. In another sign that the ABA said was encouraging, fewer banks were relying on low "teaser rates" to lure new accounts.

"Banks are definitely tightening credit, but it takes time for that to work its way through the receivables," said Jeffrey Baxter, principal of S.J. Baxter and Associates of Forest Hill, Md..

"In 1995 and 1996, issuers were very aggressive in booking new accounts," Mr. Baxter said. "It really wasn't until 1997 that they started raising cutoff scores from credit bureaus and doing back-end verification to any significant degree."

Stanley W. Anderson, president of Anderson & Associates in Arvada, Colo., said the current high level of marketing is part of a cycle in which lenders scale back to drive defaults down, then gear up again to capture new customers.

"As they move into a period of high delinquency, high chargeoffs, and high bankruptcy, the issuers tighten their credit," Mr. Anderson said. "As soon as that begins to turn around, they ease the criteria and become more aggressive."

That strategy does not sit well with Simon Kimelman, a partner at the law firm Fox, Rothschild, O'Brien & Frankel in Lawrenceville, N.J.

"The record number of personal bankruptcies has been fueled by the easy access to credit," said Mr. Kimelman, a bankruptcy expert. Though he hoped banks were tightening credit, he said, "With the overall base interest rate at 7% or 8%, inflation running 2%, and (banks) charging 21% on credit cards, there is still a lot of money to be made."

Mr. Kimelman, echoing the views of bankruptcy reform advocates including MasterCard International and Visa U.S.A., said federal law must be changed. "In bankruptcy court, many banks are offering debtors new credit cards if they agree to pay off the old debt," Mr. Kimelman said. "That is unconscionable."

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