Credit Crunch Is Beyond Mortgages

It’s not just mortgages. As it gets tougher to land a home loan, some people are also finding it harder and more expensive to get other types of consumer credit.

Some lenders, such as USAA, are nudging up credit-score requirements across their auto loans, credit cards and personal loans. Bank of America Corp. and Capital One Financial Corp. recently raised fees and interest rates for some of their credit-card customers. And this month, Citigroup Inc.’s CitiFinancial Auto started charging higher auto-loan rates for borrowers with less-than-perfect credit.

All this comes as lenders continue to tighten guidelines on mortgages and home-equity loans and lines of credit as investors back away from subprime loans and other perceived credit risks. For the most part, lenders say the changes aren’t directly tied to the mortgage mess, but reflect concerns about an economic slowdown and uncertainty about interest rates. Still, some lenders are becoming more cautious about extending credit in weaker housing markets and to people who may have exposure to certain riskier mortgages.

Card issuers can afford to be more selective about whom they extend credit to and by how much because more consumers — increasingly locked out of home-equity loans and lines of credit — are using their credit cards more. This month, for example, the Federal Reserve said consumer credit rose at an annual rate of 6.5% in June to a record $2.459 trillion, the second straight sizable gain. The increase was led by an 8.4% rate of increase for revolving credit, the category that includes credit-card debt.

For consumers, it’s a good idea to look out for any change in terms and conditions from the issuers. Although issuers can change rates and fees at any time, many will allow customers to opt out of those changes and pay off any balances under existing terms — although they will typically have to close their accounts. In recent months, Capital One, for example, changed many of its fixed interest rates to higher variable rates, while Bank of America implemented a new monthly minimum finance charge of $1.50 on former MBNA credit-card customers this past spring to bring charges in line with its existing customers’ fees.

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