Home > 2014 > Personal Finance

Bad Credit? It’s Getting Easier to Get Loans Now

Advertiser Disclosure Comments 0 Comments

As consumers have continued to improve their payment habits, lenders have started to extend more credit to consumers with poor credit.

In a review of 2013 consumer credit trends, Experian analysts highlighted the low delinquency rates across all loan products, which has encouraged lenders to open up to subprime borrowers.

“The reason you see the willingness there is because of the overall improvement in the payment behavior,” said Alan Ikemura, senior product manager at Experian Decision Analytics.

Take the delinquency rates on credit cards, which reflect a lot of day-to-day transactions: 0.56% of outstanding credit card balances were 60 to 89 days past due in the fourth quarter of 2013, down from 0.65% at the same time in 2012 and 0.77% in 2011. (This data comes from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool.)

With the exception of the deep subprime credit category (which Experian defines as a VantageScore between 300 and 499), credit utilization rates went down in all credit tiers from the fourth quarter 2012 to 2013. Payment history and debt use have the most impact on credit scores, and these improvements have encouraged lenders to do business with higher-risk customers.

It’s a similar story among mortgage and auto loan products.

“Lenders have learned their lesson to not get out of hand with it, and on the flip side, consumers know ‘Hey I can’t go crazy spending here,'” Ikemura said.

In reviewing the credit data from 2013, Ikemura and Linda Haran, senior director of solutions marketing at Experian, expressed optimism for 2014.

“Consumer confidence is up,” Haran said. “Discretionary spending continues to trend up, but not in an exaggerated way, signaling that the economy is staring to expand nicely, but in a sustainable way.”

Ikemura said any economic downturn or negative shift in unemployment may push lenders back in a conservative direction, but for the moment, the fact that consumers with great credit are well-served and people in general are doing a good job of meeting their debt obligations, lending will continue to open up.

If you’re looking to get a loan for any purpose in the near future, it’s always a good idea to check your credit before you apply.  Even though lenders are opening up their standards, the better credit you have when you apply, the better access you’ll have to lower interest rates. Furthermore, by checking your credit reports, you may spot errors that are needlessly hurting your credit; resolving them could possibly raise your scores and get you a better deal on your loans. And it can be helpful to keep an eye on your credit scores as you build credit, or work to maintain it — just so you can spot problems if your score drops unexpectedly (or congratulate yourself on your good efforts as you see the numbers rise).  There are free tools, like Credit.com’s Credit Report Card, which allow you to monitor your scores regularly.

More on Credit Reports and Credit Scores:

Image: filmfoto

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team