People with so-so credit can find more choices and better card deals By Lucy Lazarony Call them tweeners. In the world of credit cards, they fall somewhere between those folks who can't open a mailbox without a low-rate card offer dropping out and folks stuck paying super-high interest rates because of badly damaged credit. Long neglected by card companies, tweeners are getting noticed. And that means more choices and better deals for middle-of-the-road customers who shop carefully. "It's a growing market," says Don Berman, president of Cardholder Management Services in Plainview, N.Y. "There will be an ever-expanding amount of competition among card issuers in this market." What's a tweener? Tweeners fall into two basic categories: people with "emerging" credit, such as immigrants, and people with "recovering" credit, such as longtime reliable customers whose credit has slipped and who are trying to pull themselves back up. "Sometimes it's a few months. Sometimes it was a single incident. Sometimes it was a year or two," says Gerri Detweiler, co-author of Invest in Yourself. "I hear from consumers all the time about how difficult it is to find good credit deals as they're trying to get back on track." Lots of times people have paid their bills on time for years -- and then divorce, unemployment or an accident throws them off course. "Creditors have really, really short memories in terms of how things used to be," says Catherine Williams, president of Consumer Credit Counseling Service of Greater Chicago. Tweeners are also widows who've never applied for credit on their own before and twentysomethings who charged more than they could handle as students and have just landed that first good job. What's available Credit card deals for tweeners tend to be nothing fancy, with annual percentage rates ranging from the mid-teens to the mid-20s. Many come with annual fees, which often range from $15 to $50. Credit lines tend to be modest and often start at $500. Some card companies cater exclusively to tweeners, such as Atlanta-based CompuCredit. "Our customers are really middle America. They shop at Wal-Mart. They eat out at Red Lobster," says David Hanna, president of CompuCredit. "We've been able to identify and find people who have fallen through the cracks and offer them credit ... They pay their bills on time. They're good, creditworthy individuals who have been ignored." "We've been able to identify and find people who have fallen through the cracks and offer them credit ... They pay their bills on time. They're good, creditworthy individuals who have been ignored." CompuCredit's key product is the Aspire Visa, which is available as a standard, gold, platinum or diamond card, depending on a customer's credit. The average credit limit is $1,700. Annual percentage rates start at 15.9 percent and reach well into the 20s. Credit lines range from $500 to $10,000. Some Aspire Visa cards come with annual fees of $30 or $40. "Less than 10 percent of our accounts have annual fees," says Rick Gilbert, chief operating officer at CompuCredit. Tweeners may apply for standard and diamond cards on the Aspire Visa Web site. The cards are also available through LendingTree Inc., an online loan site. Other card companies who are active in the tweener market include Top 10 issuers Capital One and Providian, and niche specialists such as Merrick Bank in Salt Lake City. A growing market Experts say almost every card company has some tweeners as customers and that issuers will market more aggressively for middle-of-the-road customers as credit scoring and modeling tools become more sophisticated. How can someone with middle-of-the-road credit land a good credit card deal? Start by chipping away at any current card debt with several months of on-time payments. And then call your card issuer. "I would say if you had a year of on-time payments it would be worth it to try to push an issuer to give you a better deal," Detweiler says. Williams adds, "Creditors know that acquiring new customers is expensive and time-consuming, and if you're interested in staying with them, they're interested in staying with you." If they're not willing to sweeten that card deal, shop for a better offer. Compare annual percentage rates, grace periods, credit limits and, most importantly, fees. Some cards come with hefty application and processing fees. Avoid them. As with any card offer, be sure to read the fine print. They keep an eye on you Keep in mind that issuers are looking at more than just payment history when they evaluate potential credit applicants. They also look at income, debt and how long a person has been at their current job and residence. "Creditors get nervous. Creditors are like wives and girlfriends. They want to know where you are and what you're doing," Williams says. Providian reviews its tweener credit accounts each month. After several months of on-time payments, customers are rewarded with larger credit lines. "Creditors are like wives and girlfriends. They want to know where you are and what you're doing." "We grant more credit to them as they prove themselves," says Seth Barad, executive vice president at Providian. "We want to help people who are willing to use credit responsibly." What about lowering a tweener's interest rate? Barad says interest rates are adjusted on a case-by-case basis. The San Francisco-based issuer has an online credit card site aimed at customers with a range of credit backgrounds, including tweeners. All Aria Visa cards boast zero-percent introductory rates, a rewards program and online account access. Online applications are processed and approved in less than 20 seconds. Approved applicants receive one of four card choices: Aria Visa Platinum Premium, Aria Visa Platinum, Aria Visa Portrait or Aria Visa Persona. Card terms vary widely. Aria Visa Portrait cards come with a zero percent, two-month introductory rate that shifts to a 19.99 percent variable rate. Like its platinum counterparts, Aria Visa Portrait has no annual fee. Shop carefully When shopping for credit cards, be sure to weigh each offer carefully. Once you are a cardholder, monitor that account closely. One common mistake is trying to take on too much credit too soon. People with limited credit histories apply for too many cards. Tweeners with past card debt start applying for new cards before paying down some of their current card debt. "They're out there casting around rather than waiting, and that makes creditors nervous," Williams says. Remember, one or two cards is plenty. Tweeners can rebuild their credit and work their way up to better credit card deals but it takes time. Regular, on-time card payments are key. "You can't change your credit score overnight, but you can do it," Detweiler says. "You have to be persistent. Keep trying."
RE: Tweeners Deserve Credit, T Mark, Rather than quoting the full article you would have served the board and Bankrate.com (who would appreciate the hits) by placing the url to the article in question. Usually, a full quote is done when you intend on commenting on either the whole or each paragraph seperately. In any case, since you are interested in this article and I don't have an email address to forward this to you, I thought I would post here a recent correspondence I had with Lucy Lazarony. "I had intended to post this on the credit message board but the server is down once again" Even when its up their message forums suck! "Pardon me if I'm wrong but I'm certain I have read that very same article before sometime last year is this a reprint? There doesn't appear anything new so obviously its not an update. "Some card companies cater exclusively to tweeners, such as Atlanta-based CompuCredit." I remember this line in particular, considering the difficulty I had previously in obtaining credit I mentioned this company and their "supposed" affinity for "tweeners" to a number of individuals most of whom have been cash individuals all their lives thus no credit history, without fail every last one of them received this response. "Dear Applicant We appreciate your recent VISA application. We have given your application careful consideration. As much as we would like to serve you, we regret that we are unable to favorably consider it at this time for the following reason(s): UNABLE TO VERIFY CREDIT BUREAU INFORMATION" Interesting that they use TransUnion, considering they are based in Atlanta where Equifax is located. Another item to consider, every last applicant I knew or heard from that applied from New York (where I live btw) was turned down for various, sometimes incredulous, other times outright fabricated reasons. Best we can determine is that New York state has a usury law that caps regular APR at 24.9%, while the typical card Aspire grants the Diamond starts at 27%. I consider this definately a case of witholding revelent information at best and false advertising at worst. But then I guess CompuCredit could care less about the affect of one more negative inquiry on one's credit score. Another thing they don't advertise is that they DON'T report your account to the credit agencies unless specifically requested. I daresay if this continues the CRA's current policy of shutting out those companies that refuse to report accounts or only report negatives will bring about a drastic change in their application policy. BTW, what are your feelings on APR's 30% and above. Recently, an individual posted on a credit message board that he had been offered a "pre-approved" ASSOCIATES card with a fixed rate of 33.7%! This card has no grace period and cash advances have a fee of up to 10%!!! of the amount borrowed. This card had the gall to call itself a Platinum Card (still if Capital One can put out that pathetic joke they call a Gold Card with a $200 starting limit I guess anything is possible). To no surprise it was unanimously derided as the biggest joke they had ever heard. It was very obvious that is ASSOCIATES entry into the sub-prime market and a poor one at that, even the Aspire Visa comes off better in comparison, if it wasn't for the $5000 limit I'd place it in the sub sub prime category with First National Bank of Marin and Aria Persona. Anyways, just thought I'd let you have my 2 cents worth." Here is her response Thank you for your email. You caught us. Our full-time credit card reporter has left our company so we ended up posting an updated Tweeners article. I contacted Providian and CompuCredit about their individual card products but much of the story remained the same. Thank you for your comments and I hope you will take a moment to share your experiences on our credit message board. I was not aware that CompuCredit does not report customer accounts to credit bureaus unless a customer specifically requests it. Thanks for the heads up. This is a SERIOUS problem in the industry and one that I have written about on a couple of occasions. Here's a link to the most recent article. http://www.bankrate.com/brm/news/cc/20000428.asp As for usury laws go, my understanding is it's the state law where the credit card company is based that matters. I wrote about this subject back in March 1999. Here's the link to that article http://www.bankrate.com/brm/news/cc/19990315.asp As for credit cards with 30% APRs, they are such incredibly lousy deals but some credit card companies will continue to offer them as long as consumers, who scoff at the notion of a secured card, keep signing on. It's crummy but unfortunately perfectly legal to charge these kinds of interest rates. Lucy Lazarony Staff writer Bankrate.com There you have it.
RE: Tweeners Deserve Credit, T Furthermore... As far as my sources tell me, Merrick Bank is no longer in the game. That was the first clue for me that the article was really old. Good Stuff Steven, Peace, Barry
RE: Tweeners Deserve Credit, T To clarify further, CompuCredit does NOT report to credit bureaus, even if you specifically request it. I cancelled my Aspire Visa two weeks ago for that reason. During that call, the rep offered to lower my rate 6%, but said there was nothing she could do about the reporting to the bureaus, as this was against company policy. Not reporting positive payment history in order to hold customers captive to userous interest rates is the most insidious tactic I've come across in the journey to rebuild my credit.
RE: Tweeners Deserve Credit, T Steven Z wrote: ------------------------------- Mark, Rather than quoting the full article you would have served the board and Bankrate.com (who would appreciate the hits) by placing the url to the article in question. Usually, a full quote is done when you intend on commenting on either the whole or each paragraph seperately." The article itself is considered a public document as long as there is no intention to use it to make money (ie..commercial uses) I put it on this board because it is an interesting article. I never intended to comment on the article no matter what you expected. The article was from Bankrate.com but in pasting the article here accidently it somehow got left out.
RE: Aspire Visa = NO TRADELINE I stand corrected. I could have sworn I had read here a number of times (Doris K perhaps) that you could request it. I wonder how they will process applications when the CRA's shut them out (perhaps Equifax and Experian already have?). Yes, I am in total agreement with you regarding this insidious tactic and about the only reason I could see for keeping this card which has no annual fee? would be for 'credit insurance', in that if you were to go near your limits with your other cards the creditor may be tempted to play "ripoff games", whereupon you can basically tell them to @!#$ off by transfering your balance to a card and leverage they were totally unaware of.
RE: Aspire Visa = NO TRADELINE I had an Aspire card some time back, but it was never reported to any of the CRAs. Someone here mentioned that you could request that they report it, and that they would, so I took it at that. I think it might have been Kristi from Carreon and Associates (I'm not sure) who recommended making the request through the credit bureaus. I had no problems with Aspire. I never carried a balance, so the huge APR didn't affect me. I'm sure I'd be shocked to see what people who carry balances with them pay.
RE: Aspire Visa = NO TRADELINE Doris, you won't have long to wait now that the banks are using the excuse of rate hikes to jack up prime users APR's 2X-3X above the fed's 'actual' rate hikes, one can only imagine what the usurous sub-primer's will do. Also you can be damn sure that will prime rates will lower once the fed does the sub-primer's are on a one-way street to hell. But you can bet it will be the ASSOCIATES and Providian leading the rate hike charge both in instituting and in the rates themselves. Now as far as the Apire Visa is concerned, if all things were equal and both reported to the credit bureaus, then the Aspire Diamond sub-prime card would kick the Aria Persona's sub sub-prime's ass, as it stands Aspire's rate would have to be at least 10 points lower to compensate for lack of reporting. As far as credit reporting is concerned I'm very glad that the CRA's (yeah I know for their own selfish reasons) have taken a stand that a creditor must now report both positive and negative or not at all, at least we'll see the last of this extremely insidious practise of many creditor's who only reported negatively. Hence the huge growth of these 'upstart' CRA's who only report negative information.
RE: Tweeners Deserve Credit, T Barry: Check the FDIC site. Merrick is still in the business and going strong. You need better information.
