Discover Crunches Credit Further

Discover restricts credit further as seen in the e-mail below:

Discover Business Card Affiliates,

As a result of the current economic downturn, Discover Business Card has taken a look at credit risk and has made a decision to pause online acquisitions of its business products (Business Card, Business Miles and Business card with Cash Back Bonus) as of January 1st. At the turn of the year, the intention is to evaluate performance and the credit risk model so that the cards can once again be offered to online prospects in 2009.

Please note that this message relates only to Discover's Business Cards and not its Consumer or Student cards. You are free to continue to promote the latter and, in fact, we encourage you to do so in place of business cards.

More Credit Tightening

I got this e-mail below from Discover today since I run an ad on my blog promoting its credit cards:

"Due to the recent economic downturn, Discover Business Card has made some changes to its lending criteria. After applying for a Discover Business Card, applicants may now be asked to provide additional information in order for Discover to make a credit decision. These changes will have an impact on the Discover Business Card approval rate and therefore you may likely see the overall conversion rate for the product decline. These changes were made in mid-November."

Just another brick in the wall I guess.

Once Again - What Credit Crunch?

A poll conducted by the the National Federation of Independent Business in December 2007, came out with some surprising results:

"The net percent of owners reporting loans harder to get in recent months was unchanged at a net seven percent (eight percent said “harder,” one percent said “easier”, the average this year is six percent), typical of readings for the past several years. Only four percent of the owners cited the cost and availability of credit as their number one business problem."

"The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted net negative 10 percent (more owners expect that it will be “harder” to arrange financing), two points lower than November and below the average reading for the year. This indicates that some owners now see credit tightening on Main Street in spite of the Federal Reserve’s expansionary policies. But rates are falling and there was no change in the net percent of owners reporting credit harder to get."

The full report is here.

The material is a copyright of the NFIB Research Foundation. © NFIB Research Foundation.

Credit Crunch?

So is there really a "credit crunch" out there? What of these two facts:

Warren Buffett, the billionaire investor said "money is still available and reduced interest rates make it quite cheap."

Two additional questions were asked in a special poll of the ISM non-manufacturing panel in January. (From ISM report dated Feb 5, 2008)

Question - Is the turmoil in financial markets having any effect on your firm's ability to obtain regular or additional financing?

Yes — 14.6%
No — 85.4%