The New York Times recently disclosed that credit cards are again being offered to so-called "risky" borrowers. The card companies have realized they make a great deal of money in this market. From the article, we learn that FICO scores alone are not determinative. Supposedly, card issuers divide consumers into classes.
One is “strategic defaulters,” whose credit scores were damaged because they walked away from a home when its value dropped below what was owed on the mortgage. These borrowers made a bad bet on real estate but may otherwise be prudent risks because they make a good living.
Similarly, “first-time defaulters” once had a strong credit record but ran into financial trouble during the recession. Typically, these borrowers fell behind on some sort of loan payment after losing a job, not from taking on too much debt.
By contrast, there are “sloppy payers,” who pay only some bills on time; “abusers,” who are defiant about paying; and “distressed borrowers,” who simply do not have the means to pay.
The goal is to weed out the latter groups to identify consumers whose credit scores are blemished but who still have the money to pay their bills.
The full article is here.