Home Depot Sees Higher Losses on its Card Portfolio

The credit card portfolio of home fix-up retailer Home Depot Inc. (NYSE: HD) is facing difficult times with loss rates rising to more than 8 percent this year, compared with 6 percent last year, the company’s chief financial officer told investors this morning.

CFO Carol Tome said that more customers this year are late on their card payments and defaulting on their balance, according to the Dow Jones Newswire service. The credit quality of the typical Home Depot cardholder is pretty good when judged by the credit score they earn from Fair Isaac Corp., said Tome.

"The average FICO score of our portfolio is actually very good at 726, but the average active FICO score, the one that really matters, is 672, down from 679 last year," Tome said. "The quality of the card holder is deteriorating. Loss rates are increasing across all scores."
The issuer for the Home Depot private label credit card is Citi. Home Depot receives all profits after Citi earns its targeted return, Tome said. GE issued Home Depot’s card until 2003.

Home Depot has as several payment cards that it offers to customers  – the consumer private label card, a co-branded rewards card with MasterCard, a consumer installment loan card, a commercial revolving credit card, and a commercial "pay in full" card.