Irresponsible Spenders Create New Credit Market

The number of consumers filing for bankruptcy has increased every year since 1995 as Americans continue to spend beyond their means. Those consumers, many of whom have fallen off the radar screen of mainstream credit card issuers, are now being targeted by secured-card issuers and mortgage companies through poor credit lists.

List Service Direct, Palisades Park, NJ, has just brought two such lists back on the market. The Negative Credit Masterfile and Credit Card Turndowns files, which were managed by New Resi Data Marketing, Woodcliff Lake, NJ, until it closed in August, provide a combined 760,000 hotline names per month of consumers that have difficulty obtaining credit.

The Negative Credit Masterfile provides 250,000 monthly Visa/Mastercard turndowns, 45,000 bankruptcies and 20,000 tax liens. The Credit Card Turndowns file has a total universe of 4.59 million names with monthly updates of 445,000 MasterCard rejections. Both files were compiled from public records and response data to direct mail and telemarketing offers from a consortium of credit card issuers. Some of the names have been enhanced with mortgage data.

Nina Gray, List Service vice president of sales, said the interest in these files has picked up markedly in the last three years and that she now receives at least five inquiries per day about the files.

Statistics from the American Bankruptcy Institute, Alexandria, VA, confirm this trend. After a drop in 1993-94, bankruptcy filings have been rising every year since 1995 with a record 1.35 million consumers or 1 in every 70 households filing last year.

Secured card issuers, who require a deposit before issuing a card, and mortgage companies peddling home equity loans are the leading requesters of poor credit files.

“They're all out there searching for these people,” Gray said. “Between the secured and unsecured card issuers, they are taking over the [credit] industry. With the holidays coming, this is the best time of the year for them.”

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