Smart Borrower Blog

Subprime Consumers Access to Credit Reaches 5-Year High


Sep 28th, 2016 @ 8:04 PM by Amber Nelson


Credit card limits for those with bad to worst credit rose in the first half of 2016 to the highest level in over five years, according to new data from the Experian Market Intelligence Brief, a development that brings mixed economic signals.

Total credit card limits for those with subprime or deep subprime credit scores increased to $6.4 billion. Credit card limits usually get raised when a consumer has shown a history of responsible borrowing and repayments, so the increase in limits is somewhat good. It is also somewhat bad because allowing subprime consumers too much access to credit is part of what fueled the housing boom and bust before the Great Recession.

So far, those with bad credit have been improving their financial habits, Experian reports. Over the past five years, as credit card limits have risen, the delinquency rate among poor credit borrowers has declined by 6 percent. Americans in general have made progress in their credit management since the financial crisis, with overall delinquency rates falling 43 percent from the second quarter of 2011 to the 2016 second quarter.

“Consumers credit card behavior improved since exiting the recession as evidenced by the growth of credit card limits in particular among the subprime credit card market,” said Kelly Kent, vice president of Experian Decision Analytics. “Yet, even with the solid improvements, the year-over-year figures indicate a slight increase in delinquency rates.”

Compared with last year at the same time, overall delinquency rates rose 7 percent.

Looking at the past five years by state, 32 states experienced double-digit improvements in their credit card delinquency rates. Washington State topped the list with a 33 percent decline in its rate, followed by California with 28 percent and Oregon with 27 percent. New Hampshire, Hawaii, Florida, Nevada, Maine, Utah and Wisconsin rounded out the rest of the top ten.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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