Bankcard Originations Up

Equifax’s July Credit Report says that year-over-year (YOY) total number of new bankcards issued has increased by 27 percent (May 2011 vs. May 2010). During January-May 2011, almost 15 million new bankcards have been issued. This represents a 3-year high, but is still roughly half of the 28.5 million bankcards originated pre-recession during the January-May 2007 timeframe.

Notable within the data is the rebound in the number of bankcard originations to subprime* borrowers, with an almost 60 percent increase in originations for May 2011 vs. May 2010 alone. New subprime bankcard origination levels for January-May 2011 are up 65 percent over 2010 levels. This compares with a 63 percent YOY decrease the industry witnessed for the same period from 2008 to 2009.
In addition, total new bankcard limits have risen as well, with increases of more than 27 percent (January - May 2011), and new subprime bankcard credit limits experienced an increase of 68 percent.
Other key findings include:

New bankcard origination Equifax Risk Score distributions highlight underwriting easing, with the higher risk originations increasing from 24 percent (May 2010) to 29 percent (May 2011) of all new bankcard originations, and the representative percentage of lower risk originations decreasing from 76 percent (May 2010) to 70 percent (May 2011)

Subprime bankcard lending is expanding beyond Equifax Risk Scores of 600-659, with growth among borrowers with scores below 600

"The gains made in the issuance of new bankcards for subprime borrowers are evidence of the continued easing that we are witnessing in underwriting," said Michael Koukounas, Senior Vice President - Special Client Services for Equifax. "The rebound we are seeing in total new bankcard originations certainly provides some level of positive traction in the industry, but it should also be noted that we still have a long way to go to achieve a true return to normalcy for the market."


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