Is Capital One considered subprime?

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Is Capital One considered subprime?

Postby s.jessica » Thu Dec 20, 2012 8:11 pm

I have a silly question regarding subprime lenders. I've heard about people being denied credit because of a lender like Applied Bank showing up on their credit report. Of course here you are talking about the worst cards in the world with application fees, monthly fees, annual fees, the highest interest rate allowed and no grace period on purchases. Once you pay all the fees, you end up with something like a $200 CL.

I have a friend who never used credit so he decided to apply for one of the Applied Bank cards, he always hated plastic and didn't really want to use it, just have it and keep it active for a few months to try to get a credit score. After having the card for a year, he went to his local bank to get a loan and they turned him down because Applied Bank was on his credit report.

Later I was told lenders like Capital One, since they have a habit of giving secured cards to people with the worst possible credit could also be viewed as subprime. Then you take a look at cards like First Progress, anyone who has been paying attention would know at a glance you have a secured card because First Progress only has secured cards and I think you only need to prove you are human to get one. So then First Progress would look bad on a credit report? If so, would Capital One look bad as well?

Something my friend was warned about as well, is to beware of financing at places like furniture stores because they are sometimes backed by subprime lenders which look bad on your credit report. Now I'm going to complicate the question, let's say I have credit cards from Citi and Bank of America on my report but for some reason I kept one from Applied Bank, sock drawered the card but paid the annual fee and kept it active, could that look bad as well?

So when you compare Capital one, First Progress and Applied Bank do they are rate about the same on a credit report or does say Capital One look better? I know there are some lenders out there that look crappy on a credit report, but I'm not sure just which ones. I know when I google subprime lenders, Capital One comes up.

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Postby trumpet-205 » Thu Dec 20, 2012 10:33 pm

There is a difference between Capital One and lenders like Applied Bank, First Progress, etc.

Capital One deals with all kinds of subprime borrower, ranging from those with no credit (limited credit) to those who screwed up on their credit.

Applied Bank, Orchard, First Progress, First Premier, etc are lenders that deal with those who have seriously screwed up on their credit (bad credit). These people are the most risky borrower, because they have multiple collections, BK, judgement, etc. Default rate on these borrowers can be as high as 50%. These borrowers are the one most banks avoid. Even Capital One avoids some of them.

Capital One definitely looks better than other lenders because some credit screening do take place. There is a limit on bad credit that Capital One accepts.

Which is why people are okay with Capital One but not okay with Applied Bank etc.
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