Once upon a time the credit card companies seemed to focus most of their efforts on consumers with higher income and higher credit ratings. After all, if you have a good history of paying off bills on time, and if you tend to make more money than the average consumer, you'll probably be a good customer.
The reason that lenders like credit card companies use a credit score is to determine how trustworthy you are with money. They look at your history to determine whether you make your payments on time, what your income is, and how much you owe. The better your credit the better you would be for credit card issuers.
My, how times have changed. Credit card companies are no longer worried about going after individuals with less than perfect credit They send credit card offers to those with lower incomes and blemishes on their credit scores. They even go after college students who have no financial history and not much money to support themselves.
Why do credit card companies do this? Well, it's actually pretty simple. It's all about the interest.
Someone who is responsible with money (such as those with higher credit scores) will probably not make the credit card companies as much money in the long term. For example, paying off the balance in full at the end of each month is not what the companies would prefer (despite what they may tell you).
Sure, the credit card companies will still make money from the fees that they charged the merchants, but that's not where the real money is. The real money is in charging you interest month after month when you fail to pay the balance completely. The minimum payment, by the way, is designed to have you mostly pay finance charges and not the principle.
With that in mind, we can actually understand why credit card companies are going after these new markets. They know that someone who doesn't earn as much will be more likely to let their balances roll over at the end of the month, which equals a nice finance charge for the credit card company.
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