The Minneapolis-based retailer announced on Friday that it has become the latest credit card provider to have its profits hit by delinquent payments and will be responding by tightening up lending criteria.
These new standards will be applied to customers who live in certain areas considered high-risk, such as California, because they have suffered the most from the burst in the housing bubble.
In addition to raising lending standards for new cards, Target said that it will keep a close eye on existing cardholders who have suddenly begun using their card after a period of inactivity.
This means that if you already have a credit card with Target, you may want to be careful how you use it. The retailer will be looking out for signs that a consumer might be struggling with their finances – such as making a large number of purchases all at once.
You may be thinking, so what? I don’t even shop at Target. I’ll just apply for a different credit card down the road.
Well, Target is only one of many credit card providers that have been cracking down. For months now, banks have been doing exactly the same thing.
“Consumers need to realize we live in a new world. Banks are in turmoil and have suffered a lot of losses, and they are doing whatever they can to reduce risk,” consumer advocate Adam Levin told the Phoenix Business Journal.
A good first step for making sure you can qualify for a credit card in this new environment of wary lenders is to order your three-bureau credit report and credit score and see where you can make improvements.
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