Credit card account originations are on the rise again as account-delinquency rates continue to fall and consumers continue to show discipline in their borrowing, a report Equifax Inc. released last week suggests.
Even subprime borrowers–those with lower-than-average credit scores–are qualifying for more bankcards as the economy begins to recover from the recession, data from the Atlanta-based credit bureau indicate.
Lenders approved 2.8 million new bankcard accounts in September, up 17.2% from 2.39 million during the same period a year earlier. Some 800,000 of those borrowers were classified as subprime, with an Equifax Risk Score of 660 or less, up 53.8% from 520,000 that were a year earlier.
Credit scores in Equifax’s proprietary model range between 280 for high-risk borrowers to 850 for prime borrowers.
Bankcard loans may be growing faster than any other types of consumer borrowing, but total consumer debt, including mortgage, home equity, auto and credit card loans, continues to decline, the firm says. Total consumer debt in November was $10.6 trillion, down 7.8% from its peak of $11.5 trillion in October of 2008.
“The gradual recovery in the economy, the improvement in loan performance, combined with the effects of both consumer and lender deleveraging of debt, is opening up the market to the availability of more credit,” Michael Koukounas, Equifax senior vice president of special client services, said in a press release.
