Joseph K. Rensin always wanted to create something, but, by his own admission, he couldn't paint or draw and he certainly couldn't sculpt.
But thanks in no small measure to free flowing credit and soaring credit card delinquencies, Rensin finally got his wish -- he has created Creditrust Corp., a Baltimore-based company specializing in collecting unpaid principal on credit cards that banks and finance companies have given up trying to recover.
Business is booming.
Just seven years after the company was started in a small office in College Park, Creditrust has 750,000 customers, manages $1.5 billion in credit card receivables, and has 250 employees.
Business is so good, in fact, that Creditrust plans to hire 200 more workers by the end of November.
"This is as close to creative as I'll ever get," said Rensin, Creditrust's 32-year-old president, chief executive and co-founder. "Our hiring has been going through the roof, our recoveries have been going through the roof. Everything has jelled and clicked nicely."
There is little wonder the business is so strong.
The nation is swimming in plastic thanks to over-exuberant banks and credit card issuers, which have seen their delinquencies soar.
Banks alone have issued about 350 million credit cards, which works out to nearly 1.5 credit cards for every man, woman and child in the United States, according to Robert B. McKinley, president of RAM Research Group, a Frederick-based firm that tracks the credit card industry.
The average family has about 12 credit cards, including those issued by banks, retailers and gas stations.
"Anyone can really apply," McKinley said. "You have to have a heartbeat and a phone."
Although banks and credit card issuers have become stricter on who gets credit cards, delinquencies are expected to hit a record $22 billion by the end of the year, more than double what they were in 1995, according to RAM.
"If the economy slows down and we see a recession, the numbers would clearly jump," said Keith Leggett, a senior economist with the Washington-based American Bankers Association, the largest banking trade group in the country.
Higher delinquencies might be bad for banks, but they're great for Creditrust -- as long as the economy remains healthy and unemployment stays low. Rensin estimates that banks and major lenders will write off $40 billion in bad credit card loans this year, and $10 billion will be put up for sale.
"We think there is a big, wide-open market," said Rensin, sitting in his spacious office and wearing a crisp white shirt, a gold tie, blue braces and dark trousers. "There is so much debt out there to purchase."
It is only natural that delinquencies are rising.
"It is a combination of easy credit and the trend of easy bankruptcy," said David Stumpf, a bank analyst with St. Louis-based A.G. Edwards & Sons Inc. "There is plenty of unpaid credit card debt out there right now."
As delinquencies mount, Creditrust's opportunities grow, especially since there are only a few companies buying portfolios of bad credit cards.
Creditrust has a group of employees that does nothing but examine and buy credit card portfolios from banks and finance companies. If the company likes what it sees, it makes a bid.
The average size of a portfolio Creditrust buys is $20 million, but it has acquired ones as large as $500 million. Rensin won't disclose what he usually pays for a portfolio, though it's far less than full price.
"My hunch is that there is a huge potential pool of business. If he can buy it for 10 cents on the dollar," why not buy the loan portfolios, Stumpf said.
Rensin is relaxed in his office, located off Security Boulevard in Baltimore. It is a vastly different scene from the small College Park space in which he and a friend, Michael Whitlin, started Creditrust in 1990.
It wasn't the first company Rensin started. He was always on the hunt for new business ventures, even as a teen-ager. At 14, he developed computer software and began a software mail-order business from his home in Silver Spring.
"He was always looking to do his own thing and run his own business," said Rensin's father, Howard M. Rensin, a retired attorney.
Joseph Rensin excelled in high school, but he never graduated from the University of Maryland, where he studied business. It is fTC still a sensitive subject. Rensin was just six credits short of finishing, but running his businesses came first.
In 1988, he started Prime Realty Corp., a company that bought foreclosed real estate and houses repossessed by banks.
Two years later, he stumbled into credit cards when a banker friend called him.
"Do you have any mortgages to sell?" Rensin asked the banker.
"No. But I have got a portfolio of credit card accounts. Are you interested?"
"Absolutely," Rensin said.
There was a catch. The banker told Rensin that the credit card loans were unsecured, meaning there was no real estate or inventory that could be seized if the credit card debt was never paid back.