According to a report by USA Today as lenders close a record number of credit card accounts and slash credit lines, they're targeting an unlikely population: responsible borrowers.
A new study by Fair Isaac, the creator of the FICO credit score, shows that 11% of U.S. consumers, about 22 million people, had their lines cut or accounts closed even though they pay their bills on time and have good credit. This is more than double the 5%, or 10 million consumers, who had blemished credit and saw their lines reduced in that same period, the six months ended last October.
The findings are surprising because historically lenders have pulled back on credit for risky consumers, rather than those with good credit.
Yet lenders' definition of risk is changing as the economy spirals downward, says Josh Lauer, an assistant professor at the University of New Hampshire who is writing a book about credit reporting.
Lenders appear to be targeting high-credit-score borrowers for line reductions because they tend to use cards less and carry low balances, Fair Isaac's Careen Foster says.
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