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For several years, banks have only been approving the best borrowers. These and other lenders recently made an about-face, extending credit to individuals who have defaulted on home mortgages. This may be an indicator that the credit crunch is finally relaxing.

Those with tarnished credit no longer need to resort to payday loans or credit card cash advances for financing.

TransUnion recently announced that 64,500 borrowers who were mortgage defaulters received consumer loans from February 2009 to August 2010. While most of them obtained credit cards, nearly 40 percent got a line of credit, personal loan, or car loan.

Updated statistics are not yet available but experts report that the numbers have most likely continued to increase.

SmartCredit.com President of Consumer Education John Ulzheimer believes that lending is currently “more prevalent than the TransUnion study suggests.” Mortgage defaulters represent a special segment, says Steven Chaouki, TransUnion vice president for financial services.

They are viewed as lower risk than those who missed payments for more than one loan. The industry recognizes that the housing bust placed individuals who were responsible borrowers into impractical mortgages.

Defaulters on only mortgages are showing they are worth the risk. TransUnion found that they were half as likely to miss a car loan payment than people who missed payments for several other loans in the past. The statistics were even more favorable when it came to credit cards.

Only 11 percent of mortgage-only defaulters missed a credit card payment, compared to a figure of 27 percent for those delinquent with other borrowing.

Though they may be approved by lenders, these borrowers often face higher interest rates. The rate for a credit card may be 20 to 25 percent, compared to 15 percent for someone with average credit. Bad credit auto financing can also be costly, with a rate up to 19 percent, rather than the average 4.7 percent.