Bank of America's (BAC 0.28%) past is ugly. Recently, fellow Fool John Maxfield pointed out that mortgages weren't its only problem.

Its credit card business also proved lackluster during the financial crisis, resulting in billions of dollars in losses.

But is the Bank of America today just as reckless?

A look at the credit card portfolio
Taking the credit card portfolio in isolation, let's look at what I believe to be a very important metric in understanding Bank of America's credit card exposure: FICO scores.

  • Second quarter of 2009: 17% of Bank of America's credit card portfolio is attributed to borrowers with a FICO score of less than 620.
  • Third quarter of 2009: 17% of Bank of America's credit card portfolio is attributed to borrowers with a FICO score of less than 620.
  • Fourth quarter of 2010: 12.4% of Bank of America's American credit card portfolio is attributed to borrowers with a FICO score of less than 620.

Fast-forward to today:

  • First quarter of 2014: 5.4% of Bank of America's U.S. credit card balances are attributed to borrowers with a FICO score of less than 620. More than 80% of borrowers have a FICO score above 680.
What happened? A combination of events. Balances were charged off and accounts were closed, separating the bank from lower-quality borrowers. In the meantime, Bank of America began issuing new cards only to creditworthy borrowers.

A change in underwriting
The "old" Bank of America was a terrible credit card underwriter. We know that from the losses on historical income statements, and from CEO Brian Moynihan's own admission.

But, looking forward, I think it's safe to say Bank of America is underwriting better-quality borrowers today than in the past. This shift took hold in 2009, when the bank reported underwriting new credits who had an average FICO of 773.

This isn't to suggest that Bank of America won't revert to poor underwriting once again. Rather, it's just a suggestion that, at least for now, the credit card book likely looks nothing like it did years ago. Barring any rapid change in the reported FICO statistics, losses through a cycle should be much lower from today's book of credit card receivables than those during the financial crisis.