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When Bad Things Happen to Good People ...

Bankruptcy May Be Your Option

Credit cards now more available to those with lower credit scores

The economic recession of 2008 hit consumers hard in Oklahoma and across the nation. In high numbers, people were losing their jobs and homes and finding it difficult or impossible to pay outstanding debt.

Many people were left with no choice but to file for bankruptcy in order to get a fresh start. Lenders were suffering financially as well, and many people with less-than-perfect credit were unable to obtain a loan or a credit card. 

Now, economists tell us that the recession has ended and that there are signs of an economic recovery. Perhaps one of those signs, whether good or bad, is that credit card companies have once again started marketing and issuing credit cards to subprime borrowers.

To credit card companies a subprime borrower is typically anyone who has a credit score lower than 660, on a scale in which 850 is considered perfect. The reason that companies seem to have once again opened up lending to these borrowers is that there is not currently much growth in lending to people with better credit scores.

That market seems to be somewhat tapped out for lenders. Therefore, it seems the only way to spur growth is to once again begin reaching out to subprime borrowers.

This could be a good thing for those who are recovering from a bankruptcy within the past several years, as it will give them an opportunity to begin rebuilding their credit, but it also comes with some pitfalls to be aware of.

Those who feel they may need assistance with answering questions regarding their options, should they find themselves dealing with financial uncertainty, may want to seek the advice of a legal professional.

It is extremely important for borrowers to know what they are getting into. This includes having a good understanding of the offered terms, including interest rate, annual membership fees, late payment penalties, and default interest rates. Credit cards can be a very useful tool, but if not used carefully, they can quickly become unmanageable.

Source: The Wall Street Journal, "Credit card lenders pursue riskier borrowers," Annamaria Andriotis and Robin Sidel, June 26, 2014

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