October 10, 2009
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Bad Economy Steers Credit Score Requirements, Pt. 2
From a business perspective.Of course, we all know the rationale that the credit card industry is using. Max profit with max security. They still need a good supply of borrowers but they also have to cut back radically on some of the past recklessness. So they're trying to trim off a few pounds of risk and build more muscle by carefully selecting only the best credit card prospects. They're still a far cry from being ‘lean & mean' but, at least, they've regained much or their shareholder confidence (which they must do). Stocks for major credit card lenders like BofA and Discover have almost tripled in value just since last year (admittedly though, they were at an all-time low). This is not to say that their current credit card portfolio won't continue to operate at a loss into next year. It only means that they've stopped the bleeding and are on the road to recovery. Not all banks are doing well however. There still remain some bad apples who are poisoning the reputation of the credit card industry. Two that stand out are HSBC and Wells Fargo (under the guise of Wachovia, formerly a small local Charlotte bank with a good name who were then adulterated by the now-defunct First Union and their bad name).
Business credit card accounts are finally starting to standardize. A small business which wishes to build resources using credit card financing wil now have to measure up with a good credit score, a good business plan, a good amount of start-up capital a good cash flow, and be a person with a good character profile. Otherwise, they may still qualify for a business credit card account but, the amount of available credit on the card will not be enough to provide much more then a 'slush account'. Not enough to finance capital expenditures.