American Credit Scores Crash To New Lows
“Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It’s unlikely they will be able to…
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Banks, particularly regional and community financial firms, are struggling with defaults on both residential and commercial mortgages. To stay out of the clutches of the FDIC, they have become remarkably cautious about lending, even to people with good credit scores.
The number of people who have been unemployed for over six months is now in the millions and nearly 25 million Americans are out of work. This population is not likely to see their credit scores repaired for years.
The young, for years targets for credit card companies, are unemployed at higher rates than people over 25. That means that this “feeder” population for credit cards is falling and some of these people noe have no credit scores at all.
Another trend that has hurt credit scores immensely is the disappearance of home equity loans which were once taken out by huge numbers of Americans who had houses worth more than their mortgages. Now, more than 11 million mortgages in the US are underwater. People are abandoning homes that are being foreclosed upon. Either of those actions severely damages credit ratings.
One of the long-term effects of low credit scores is a likely long-term drop in consumer spending. People often cannot afford to buy things by paying cash. And austerity is the rule of the day.
Douglas A. McIntyre
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
