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Credit-risk models are changing, and a FICO score of 720 does not generate the same sense of security in the payments industry that it did a year ago, says Brian Riley, research director for the bankcard practice at Needham, Mass.-based TowerGroup, a research company owned by MasterCard Worldwide. As the industry tries to cope with bad debt and scrutinize its acquisition practices, an applicant with a few thousand dollars in credit card debt, a sizable mortgage and car payments now sends up red flags. "I have to be worried-is this guy out of work?" Riley asks. "Does he have to go shopping at Bloomingdale's just to feel better?" The whole model has changed, he says. The economy also has exposed vulnerabilities in the so-called "mass-affluent" sector, which includes consumers with household equity and assets of $100,000 to $1 million. "It's important that issuers do maintain a little bit more of a conservative posture until things settle down," Riley says. "Right now, there are so many ways the economy can go."

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