National multi-cultural coalition releases new data on use of low limit credit cardsMortgagePress.comCitizens for Equal Access to Credit, TransUnion, Political and Economic Research Council, Javier Cuebas
Citizens for Equal Access to Credit, a multi-cultural,
non-profit coalition, released a study that surveyed the usage of
low limit cards in the United States. To illustrate the ability of
consumers to re-establish their credit, TransUnion, on behalf of
Citizens for Equal Access to Credit conducted an analysis of the
"graduation rates" of cardholders over a 24-month period. The
accuracy and methodology of the study was confirmed by the Political and Economic Research
Council, an independent non-profit public policy research
"As Congress and the Federal Reserve Board continues to evaluate
proposals to protect consumers we feel that it is essential that
small businesses, communities of color and underserved segments and
the organizations that represent them must have a voice in this
process," said Javier Cuebas, executive director of Citizens for
Equal Access to Credit. "Over 70 million people, one in three
individuals in the U.S. today, find themselves in the low limit or
'sub-prime' category and, as the study demonstrates, low limit
credit cards represent an effective way for to access and rebuild
credit for a great many people."
The study, which was based upon a sample of 360,000 consumers
found that nearly 35 percent of consumers with low limit cards
improved their credit scores and more than 60 percent of consumers
with an increase of 40 or more points in their credit score
"graduated" to higher limit cards over a two-year period.
Additionally, the data demonstrates that low limit credit cards can
and do help consumers re-establish good credit. To read the
complete study click
Specifically, the analysis found that over a 24-month period, 35
percent of consumers improved their credit score. Of those who
improved their credit score, 20 percent-24 percent of consumers
opened prime credit cards with at least a $1,000 credit limit and
58 percent of consumers received prime promotional credit offers
providing important opportunities to access credit.
Citizens for Equal Access to Credit is comprised of past and
present low limit credit card customers, leading national minority
organizations, providers of low limit credit cards, Chambers of
Commerce, small business associations, and groups and individuals
from across the nation.
Citizens for Equal Access to Credit seeks to create a positive
dialogue between leading national organizations representing
minorities and other key stakeholders to promote positive change in
our credit market. The organization will also conduct financial
literacy education programs in underserved communities and provide
information on the need to protect consumer access to credit. Over
the past several months thousands of consumers and leading advocacy
groups have written to the Federal Reserve Board to express their
concern about the impact of the Fed's proposed Rule on continued
access to credit.
For more information, visit www.equalaccesstocredit.org.