"Credit card companies are being more selective to whom they issue credit," said Olivier Garret, CEO of Casey Research. "Many Americans may have noticed that while their mailbox used to burst with junk mail of the 'You're Pre-Approved' sort, these days the influx has slowed down to a dribble. That's no coincidence - credit card direct mail offers in the third quarter of 2008 have seen a 28% drop year-over year as Visa, AmEx & Co. are struggling to cope with a tidal wave of defaults."
"Credit issuers have added more risk factors to determine who qualifies for credit. Aside from late bill and mortgage payments, now location, profession, and even shopping behavior are considered. If you live in a high-foreclosure area, work in the real estate, automotive, or construction business, and buy your household necessities at Wal-Mart, you may find it harder to get credit."
Moody's Investors Service reported that uncollectable accounts rose 48% in August compared to the same month last year, the 20th consecutive annual increase. This number is expected to go even higher in 2009, potentially exceeding the charge-off rates during past recessions. Thus, credit card members are increasingly coming under scrutiny - and not just those in the subprime category. Customers with a credit score of 700, who were deemed 'most creditworthy' just a year ago, are not anymore. According to cardratings.com, 730 is the new 700.
"Credit is being tightened to the point of being scarce. Now is the time to stop living beyond your means, start saving and investing in recession proof assets," said Mr. Garret.
