Creditors New Policy: No Credit History, No Problem

Immigration is having a significant effect on the credit industry. A number of major companies in the credit industry are changing their policies as they attempt to capture the growing market of immigrants, both legal and illiegal.

Bank of America has quietly, without advertising, lowered its requirements for credit cards in Los Angeles. It no longer requires a Social Security Number, targeting illegal immigrants.

As demographics change, credit options are changing as well. FICO Expansion score is a new credit risk score that has been tested by credit card lenders, including First Premier and HSBC. It is designed to predict risk for an estimated 50 million U.S. consumers, many are recent immigrants and young adults, who fail to receive a traditional credit score due to either non-existent or short credit histories.

The new way of scoring credit risk helps lenders serve this growing, underserved market, and it helps these new customers, who have no credit history, gain access to credit much faster. The scores are based on alternate data sources, such as deposit account records, pay day loan cashing, and purchase payment plan performance.

A number of banks have begun offering checking accounts and mortgages to immigrants.

"This activity is not so much a philanthropic gesture on the part of banks and credit card issuers, as it is looking for growth opportunities in a very untapped market. Most of the recent expansion in the credit and banking industries have been vertical or through acquisitions. There are so many guidelines which are restricting these acquisitions that these industries now must think horizontally, by creating new markets. The increasing population of immigrants, illegal and legal, is a promising market for creditors," says Bill Hardekopf, CEO of LowCards.com

Expanding into a market with no credit history is risky, but the creditors charge high interest rates and fees that make it worth their risk.

"Bank of America requires the applicant to have an account with the bank, and they charge extremely high interest rates of over 20%. They are locking in new customers and making good money doing it," says Hardekopf.

LowCards.com ( http://www.lowcards.com ) is a website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards/rebates, and lowest intro rates. It also gives and unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over six years.

New Airline Reward Changes: Use or Lose Your Frequent Flier Miles

If you have several frequent flier accounts, but have no idea how many miles you have accumulated, it is time to review your accounts. Airlines are shortening expiration periods for inactive frequent flier accounts; if you don't use your miles soon, you may lose them.

Beginning January 31, 2007, US Airways will cut their activity period from 36 months to 18 months (US Airways' policy is not retroactive). United Airlines recently announced that Mileage Plus miles will expire on Dec. 31, 2007 in accounts that have not earned or redeemed miles since July 1, 2006.

One major airline has already made significant cuts in the frequent flier program. As of Dec. 31, 2006, Delta Airlines cut the life of frequent flier miles down from 36 months to 24. Mileage balances of members who had no Delta SkyMiles activity within the last two calendar years (2005 and 2006) expired on December 31.

"This shift in frequent flier miles further underscores the decrease in overall rewards programs that we are seeing in a number of industries," says Bill Hardekopf, CEO of LowCards.com. "We monitor the rewards offered by credit card companies and there are cutbacks in a number of areas, making it more difficult for consumers to reap the benefits they once enjoyed. We are seeing it with hotels requiring more points in order to qualify for a free room, American Express cutting the rewards points in half for everyday purchases, Citi reducing the cashback rewards on one of its cards, and now airlines decreasing the life of their frequent flier miles. Consumers need to be aware that the terms of many reward programs are tightening up and it could be harder to redeem these benefits."

If you are close to losing your miles, here are some ways to show activity in your account:

* Fly on the airline, or one of its partners.

* Purchase something from one of its retail partners. You can find these on the airline's website (make sure you purchase through the website to get the credit).

* If you aren't realistically close to 25,000 miles for a free ticket, use the miles for a hotel room or merchandise.

* Transfer your miles to another frequent flier member.

"The airlines may allow you to reactivate your account for a fee. Most charge you by the mile plus a transaction fee," says Hardekopf. "Unless you are very close to a free ticket, this is not worth it."

LowCards.com ( http://www.lowcards.com ) is a website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards/rebates, and lowest intro rates. It also gives and unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over five years.