Word: creditable
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...Some things have changed since the credit crisis broke. "Large banks have at least temporarily backed out of this business," says Chris Kukla of the Center for Responsible Lending, which tracks predatory lending. "But in the fringe financial business, there are plenty of firms that are willing to take advantage of subprime borrowers' difficulties accessing credit." (See how Americans are spending...
...Though there are soft spots in the subprime market, overall, business is good. The percentage of auto loans going to people with poor credit, for example, has been increasing. And while a number of banks have stopped offering credit cards to the debt-challenged, there are still companies handing out subprime plastic. First Premier Bank, for one, just tweaked the fees on its credit cards aimed at individuals with low credit scores to comply with recent legislation, and its business proceeds apace...
...lone exception is housing. Mortgage brokers say it is still hard for individuals with bad credit to get home loans. The subprime home loan market peaked in 2005, according to the publication Inside Mortgage Finance. That year, thousands of lenders and mortgage brokers handed out $625 billion in mortgages to borrowers with low credit scores, which is generally anything below 650. The credit crunch, though, put most of those firms out of business. Last year, financial firms made just $4 billion in home loans to people with poor credit. That number excludes loans backed by the Federal Housing Administration...
...even the home lender of last resort is increasingly ditching those with low scores in favor of people with better credit. In the last seven months of 2009, the most recent data available, the FHA, which doesn't make its own loans but provides insurance for lenders that do, backed just $8.3 billion in loans to borrowers with a credit score of 619 or worse. That's down from $39 billion in the same time period a year before. (See a report card on the stimulus programs...
...auto lending, however, bad credit doesn't seem to be a hindrance. Slightly more than 36% of the car loans made by banks and finance companies in the fourth quarter of 2009 were to subprime borrowers, according to Experian Automotive, up from 34% in the third quarter. Still, borrowers have to pay more to get those loans. The interest rate on loans to finance purchases of used cars for buyers with credit scores of 550 or less climbed to nearly 18% at the end of last year. That's nearly 2 percentage points higher than those same customers were being...