The last couple of weeks have been psychologically tense. The stock market has been getting hammered. The credit markets (especially institutional lending) has transformed. Housing prices continue to trend lower, though at a slower pace (see today's S&P/Case-Shiller home-price report for July). And the consumer continues to look like a deer in the headlights. Indeed, as far as the consumer knows, the consumer credit markets have all but dried up for them as well. And they'd be wrong.
Consumers who continue to keep their eyes on the headlines are missing the boat. I will concede that the consumer credit markets have closed up for some consumers (no question about it). But banks still want to lend to good risks (indeed, they NEED to lend to survive). Although this is anecdotal, I have friends who, over the past week, have applied for a slew of credit cards. All of them have FICOs over 700 (some in the low 700s). With the exception of a Nordstrom denial (too many inquiries), it was a clean sweep. There were American Express, Discover, Citibank, Juniper, HSBC, and Chase approvals. And the limits were generally strong. I was surprised. I shouldn't have been.
I had fallen into the trap of looking at the overall markets -- and paying attention to the scary headlines. I figure if I am doing it, so are a lot of other people. I'm now focused on the ball again. There is a bear market for some people -- yes, indeed -- but there is also a bull market out there as well. Last week I wrote a story about being flexible in my thinking. I'm always willing to tweak my thesis.
People with good to excellent credit can still apply for credit cards. They'll still get approved. They'll still receive healthy limits. In other words, despite all the doom and gloom, there is opportunity out there for those who qualify. The banks are open for business. They're simply waiting for the right people to come on in.
Don't get caught in the trap of thinking that everyone is foreclosed from the consumer credit markets.
That's simply not so.