Kolk advised, however, that a perfectly managed credit card business might not be as attractive to a potential purchaser as one that needs some improvement.

“If a portfolio has been managed well, it might not leave much room for improvement,” he said.

And the key is to identify problems as soon as they arise, according to Robert Hammer, founder and CEO of R.K. Hammer and Card Knowledge Factor, a Thousand Oaks, Calif.-based bank card advisory firm.

“It is a well-accepted maxim in the card business that 'a card loan loss taken early is most always lower than if delayed later,'” he said.

The experts named nine red flags that might scare away a potential purchaser:

1. Cash advance as a percentage of total booked loans

Non-purchase draws against a card are high risk, according to Hammer. That's why credit unions and other financial institutions have higher interest rates attached to them. Hammer said that if less than 15% of a loan portfolio is from cash advances, that is considered to be a low risk. However, once that percentage reaches 25% or higher, it becomes a high risk.

“They've got a portfolio that's ready to explode,” he said, adding that consumers who have a large cash advance balance are likely to be short on cash. “Why would someone do that unless they are trouble?”

He added, “As with any metric, it is the trend line, not the point in time that matters most.”

2. The need for quick cash

Credit unions should not wait until they absolutely need the cash from a potential purchase, according to Kolk.

“We saw a lot of institutions that wanted quick cash,” he said. “If you're trying to address a financial need, don't wait too long.”

3. Too much growth too soon

While growth in a credit card portfolio is usually attractive to a potential purchaser, speedy growth can be a warning sign of other financial problems, according to Costa.

“Has there been rapid growth?” he asked. “It's very easy for rapid growth to mask losses.”

4. Certain changes in card policies

Not all changes are bad, according to Hammer. However, any change that loosens controls is considered bad news no matter what management presents as the rationale for it.

“Anybody who loosens credit standards [is making] a big mistake,” Hammer said, adding that in particular, any policy changes that are made just prior to a sale are considered suspect.

5. Questionable fees

Some fees added to a credit card account may be risky from a regulatory standpoint, according to Costa. He said fees for any type of insurance, such as cancellation insurance or other add-on services, may be questioned by someone examining a portfolio.

6. Frequent card member address changes, returned NSF payments and first payment defaults

“Bells and whistles ought to be going off,” Hammer said in regard to this particular red flag.

Some of these issues come about as a result of failing to close an account early enough. Hammer said if a credit union is still charging out at 180 days, it could be masking other issues. He said the credit union should be closing out an account much sooner.

“Not to take it earlier postpones a loss,” Hammer said.

First payment defaults are a particularly thorny problem, Hammer said, noting that 80% of those card accounts will be charged off as losses.

“Take the loss early, and it will be less than allowing it to roll through the delinquency queues,” he added.

7. High gross card member attrition rates

If gross attrition rates climb higher than 12%, there are problems with the card portfolio, Hammer said. Members paying down much more than the typical 20% repayment rates, frequent calls from members inquiring about the payoff amount and active card members suddenly becoming inactive are danger signs.

“Management needs anti-attrition strategies for each of these events,” according to Hammer.

8. High line utilization rates

Hammer said it is not uncommon for a credit card portfolio to have utilization rates that reach 50%. Higher risk accounts have a tendency to be used more often. In addition, line usage by FICO bandwidth can reflect very wide rates.

9. A 30-day delinquency bucket

“The trends of cure rates and subsequent roll rates in the delinquency queues can be very revealing,” Hammer said.

A portfolio purchaser might watch for changes early in a cycle, since total delinquency by account doesn't show the early risk profile needed to judge a portfolio's quality.

There are other warning signs as well, Hammer said, including numerous requests for line increases, frequent and wide loan balance swings, and multiple card applications. These issues often do not show up on any report and require a deeper dive for anyone judging the quality of a portfolio.

Hammer said credit unions and other financial institutions should implement a contingency plan in case of an economic downturn.

“Everything that touches a consumer should have an economic contingency plan,” he said.