The credit scores of Americans across the country continue to drop, and almost one in four Americans are now considered a bad risk for lenders, according to numbers provided to the Associated Press by FICO Inc.
According to those figures, about 43 million people have credit scores that are below 599. Credit scores beneath that figure are considered a bad risk for lenders.
The many consumers who fall into this category will likely find it harder to acquire credit cards, car loans and mortgages, especially now that banks have lending standards that are more stringent than they used to be.
The economic recovery could even be slowed by limited access to credit for all consumers. But those with lower scores who in the past have depended heavily on credit and debt for their spending may find it particularly difficult to make big purchases.
FICO gathers its consumer information from credit reports for the month of April. The number represents an increase of 2.4 million people who fell below the 599 credit score mark.
The last few years have seen a dramatic rise in these numbers, as well as more volatility in the lists. In the past, before the current recession, around 15 percent of the population traditionally fell into the lowest tier of credit scores, usually around 25 million people.
There are around 170 million consumers in America with active credit accounts.
According to the Associated Press, it is likely that more people will fall below this credit score marker. A drop in credit scores might be delayed for several months following a misstep. And with those many people in the country facing continued unemployment and impending foreclosure, credit scores will soon be facing more drops. A foreclosure alone can cause a credit score to drop by 150 points. Bankruptcy filings also affect credit scores, and those numbers continue to be at record highs as well.
It could be years before those with less than desirable credit scores are able to rebuild their credit.
The Associated Press spoke with Ritch Workman, a mortgage broker from Melbourne, Florida. He said the tight credit market and low scores made it tough for people to get the loans they needed to buy a home. “I don’t get paid for loan applications, I get paid for closings,” he said. “I have plenty of business, but I’m struggling to stay open.”
The numbers on the good side show that 17.9 percent of consumers have a credit score of 800 or more. This number is well above normal levels, which are generally around 13 percent. However, the numbers are down from the levels they were at before the beginning of the recession, when 18.7 percent of the consumer population had above average credit scores.
The numbers for the middle of the pack, those with moderate credit scores, are at levels that are just below the normal rates. Those with credit scores between 650 and 699 make up 11.9 percent of consumers, down just a bit from 2008 numbers, but more than 5 million people fewer than the historical average, according to the Associated Press.
According to the article, FICO scores are a pretty good indicator of consumer payment behavior, but there are nuances. A lender looking at a credit score can’t always get the full story about why the credit score is where it is.
PAID ATTORNEY ADVERTISEMENT: THIS WEB SITE IS A GROUP ADVERTISEMENT AND THE PARTICIPATING ATTORNEYS ARE INCLUDED BECAUSE THEY PAY AN ADVERTISING FEE. It is not a lawyer referral service or prepaid legal services plan. Total Bankruptcy is not a law firm. Your request for contact will be forwarded to the local lawyer who has paid to advertise in the ZIP code you provide. Total Bankruptcy does not endorse or recommend any lawyer or law firm who participates in the network nor does it analyze a person's legal situation when determining which participating lawyers receive a person's inquiry. It does not make any representation and has not made any judgment as to the qualifications, expertise or credentials of any participating lawyer. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. The information contained herein is not legal advice. Any information you submit to Total Bankruptcy does not create an attorney-client relationship and may not be protected by attorney-client privilege. Do not use the form to submit confidential, time-sensitive, or privileged information. All photos are of models and do not depict clients. All case evaluations are performed by participating attorneys. An attorney responsible for the content of this Site is Kevin W. Chern, Esq., licensed in Illinois with offices at 25 East Washington, Suite 400, Chicago, Illinois 60602. To see the attorney in your area who is responsible for this advertisement, please click here, or call 866-200-8052.
FLORIDA ONLY: Total Bankruptcy is considered a lawyer referral service in the state of Florida under the Florida Rules of Professional Conduct. By all other standards, Total Bankruptcy is a group advertisement and not a lawyer referral service.
If you live in Mississippi, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.