Card Issuers Rethink What Makes Someone Creditworthy

Capital One and Synchrony earnings results this week highlight a consumer credit market that is becoming more segmented: lenders are drawing finer distinctions within credit tiers, millions of new accounts are still being opened and card products are increasingly being matched to both a borrower’s credit profile and expected spending behavior.

Beyond the traditional measures of spending, balances and credit losses, the second-quarter earnings calls provide a closer view of how two of the largest card issuers are approaching consumers after several years of tightening, normalization and changes in household finances.

1. Prime Versus Subprime

Capital One continues to originate across the spectrum, but its treatment of the Discover portfolio illustrates how much can differ among borrowers within broad credit categories. Discover expanded credit during 2022 and 2023 before reducing originations and credit-line increases beginning late in 2023. Since acquiring the company, Capital One has tightened further in areas where it is less comfortable with borrowers’ ability to withstand financial pressure, particularly among high-balance revolvers.

At the same time, Capital One is investing heavily at the other end of the market. Chairman and CEO Richard Fairbank said during the earnings call that the company continues to pursue its “heavy spender franchise at the top of the market,” while also pointing analysts toward its originated upmarket portfolio as a better comparison with issuers that do not deliberately originate subprime accounts.

PYMNTS Intelligence data shows why improving credit metrics do not erase pressure among subprime consumers. About 17% of U.S. consumers, or 44 million adults, are subprime, and 55% struggle to pay monthly bills. Yet their card behavior is changing: the share that always or usually revolves balances fell from roughly 50% in mid-2023 to 38% in January 2026, while 35% hold no credit or store card at all. For issuers, subprime remains a sizable market, but one increasingly defined by cash-flow pressure and changing credit use rather than FICO scores alone.

Synchrony has also experienced a change in its credit mix as it has added and renewed major partners. When an analyst asked about the implications of the portfolio moving toward higher-credit-quality consumers, CEO Brian Doubles said the company evaluates programs against its long-term return requirements, including newer and smaller programs.

A FICO score establishes an important measure of risk, but lenders also have to account for balance size, propensity to revolve, expected spending and the economics of acquiring and retaining that particular account.

2. Opening the Account Is Becoming Only Half the Job

Synchrony generated more than 5.1 million new accounts during the second quarter and roughly 9.5 million to 10 million during the first half. CFO Brian Wenzel said that puts the company on a trajectory toward about 20 million new accounts for the year. The growth extends across partners and retail categories rather than depending on a single program.

Capital One next expansion could also come from Discover once the portfolio conversion is complete. Half of Discover’s new originations are already running on Capital One technology, with the front book expected to be fully converted by the end of the third quarter.

Digital Channels Raise the Stakes After Approval

The large number of new accounts makes the post-approval relationship more consequential. PYMNTS Intelligence found that 70% of cardholders use their primary card’s mobile app and 69% say app quality influences which credit card becomes their most used card. That figure reaches 87% among Gen Z. Nearly one-third of app users said they increased spending on a card after adopting its app.

The digital channel therefore connects account acquisition to spending behavior. An issuer can approve a customer and still receive little economic value if another card captures most of that consumer’s transactions. Apps increasingly serve as the place where cardholders check balances, manage payments and rewards, and decide how actively to use the account.

3. One Consumer Can Now Fit Several Card Products

The discussion on conference calls indicate that issuers are using different products to capture consumers with different credit and spending profiles.

Synchrony’s Lowe’s relationship provides a clear example. Its commercial co-branded card now operates alongside the retailer’s private-label program, creating another route for applicants who do not fit the underwriting requirements of the co-brand.

Wenzel said applicants who might otherwise receive nothing after applying for the co-brand can be “offered at least a private label card.”

The implications extend beyond Lowe’s. Private-label cards can be targeted around purchases with a particular retailer, while co-branded general-purpose cards can follow spending outside that merchant. Different underwriting criteria can consequently place consumers into different products rather than treating approval as a binary decision.

Capital One is approaching segmentation through its Discover integration. Fairbank said putting Discover originations onto Capital One technology will allow the company to deploy “full spectrum underwriting” alongside its spender capabilities, which it expects eventually to support more originations and purchase volume.

The earnings point toward a card business becoming more precise at several points in the consumer relationship. Issuers are differentiating more closely among borrowers, competing harder for spending after an account is opened and using multiple card products to accommodate different credit profiles.