Bankcard originations hit a three-year high during the first five months of this year, with almost 15 million new cards issued during that period, new Equifax data show.
Still, the number is roughly half the 28.5 million bankcards originated pre-recession from January through May 2007, according to Equifax’s July National Credit Trends Report.
The report cites a rebound in bankcard originations to subprime borrowers–defined as those with Equifax risk scores less than 660. Within that group, originations rose almost 60% in May from the same month a year earlier. New subprime bankcard origination levels for January through May were up 65% from a year earlier. This compares with a 63% year-over-year decrease the industry witnessed for the same period from 2008 to 2009.
In addition, total new bankcard limits have risen as well, with increases of more than 27% during January through May, and new subprime bankcard credit limits experienced an increase of 68%, according to Equifax.
Moreover, new bankcard origination Equifax Risk Score distributions highlight underwriting easing, with the higher-risk originations increasing to 29% of all new bankcard originations in May compared with 24% a year earlier, and the representative percentage of lower risk originations decreasing to 70% from 76%, the credit bureau said in a press release.
Subprime bankcard lending is expanding beyond Equifax Risk Scores of 600-659, with growth among borrowers with scores below 600, Equifax said.
“The gains made in the issuance of new bankcards for subprime borrowers are evidence of the continued easing that we are witnessing in underwriting,” Michael Koukounas, Equifax senior vice president, special client services, said in the release. “The rebound we are seeing in total new bankcard originations certainly provides some level of positive traction in the industry, but it should also be noted that we still have a long way to go to achieve a true return to normalcy for the market.”
