Subprime consumers gaining more access to credit

Consumers who may have had their credit card debt written off as uncollectable in the past might now be able to once again begin borrowing.

Data suggests that the extension of new lines of credit, and particularly creditcards, to consumers with subprime credit card ratings has expanded 41 percent in the last year, according to a report from MarketWatch. This includes 24 percent of all new credit card accounts issued last year and this year being granted to borrowers with credit scores below 700, up from 22 percent in 2010.

The reason for this is that the risk of default for credit card accounts has fallen considerably in the last three years, the report said. While default risk stood at 7 percent in 2009, immediately following the recession, it is now just 3 percent. However, that rate is still notably elevated from the 1 percent default risk observed in 2005, prior to the onset of the recession.

Consumers who have defaulted on their credit card accounts may need to seek some form of debt relief to help avoid some of the costly fallout that may occur.