Risky Borrowers Find Credit Available Again, at a Price

The credit market is looking up again as banks started dishing out credit cards after a 3 year slow down. This slow down had happened because of credit extended to risky borrowers which had resulted in a 189 billion dollars loss to the banking system. This loss was a significant part of the 2 trillion dollars that the banks have lost since the start of this crisis. However the banks have a different strategy for extending credit this time. Previously the banks seemed to pre approve anybody.The housing market collapse resulted in a lot of losses to the banks as people simply walked away from their homes when the value of the house dropped below the mortgage value. But this time, the banks have moved away from the traditional criteria of a credit check only. This time around they are categorizing people according to their habits. So for example a person who is registered on a job site online is considered a better risk than a person of equal credit score. The goal is to find people whose credit scores might be blemished but have the capacity and the willingness( checked by the new behavioral criteria) to pay their bills. The catch however, is a higher interest rate and annual fees. This approach shows that the banks want to grow again but they are moving more cautiously in a field which resulted in nearly bringing the whole industry down.