Survey Shows that Banks are Easing Standards for Credit Card Loans
July 3, 2012, Written By Lynn Oldshue
Some banks are loosening standards for credit card loans again according to the new “Survey of Credit Underwriting Practices” by the Office of the Comptroller of the Currency. Credit card underwriting standards eased by 35 percent during a 12-month period that ended February 29, 2012 (up from 25 percent in 2011). 15 percent say they tightened their standards (down from 44 percent in 2011).
The study shows the methods for easing the underwriting standards include scorecard cutoffs, debt-to-income rations, and changes in pricing and fees.
Reasons for the easing are competitive environment and increased competition from new companies, economic outlook, and product performance. Credit risk has stabilized so banks have a growing tolerance for risk.