Thursday, November 17, 2011

The Link Between Credit Cards and Mortgages

Do you currently have a mortgage on your home? If so, chances are good that credit card companies will be targeting you. According to an article by Janet Dedrick on the Equifax Finance Blog, consumers with mortgages are statistically better risks for credit card companies.

Her article, “Credit Trends: Mortgages and New Credit Cards” explains that consumers with mortgages are usually overall lower risks. She also observes other credit trends for 2011 that may surprise you.

  • People with mortgages represent 42 percent of new cards issued.
  • Almost 60 percent of new credit went to consumers with mortgages.

According to Dedrick, a majority of new credit card consumers have equity in their homes. Roughly half of them have property values estimated at $200,000 or below, with 35 percent falling in the $100,000 to $200,000 range. Even consumers who are underwater on their mortgages are still receiving new credit. Of the people with a credit score above 700, 30 percent have mortgages that are underwater. Credit card companies seem to understand that people can't control falling home values.

The number of people applying for and getting accepted for credit has increased slightly in 2011. Of course, credit limits are still tight and lenders remain cautious.

If you have applied for a new card this year, were you accepted? How do you compare with the statistics mentioned in the article?

To read Dedrick's full report, visit the Equifax Finance Blog.

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