August 28, 2009
It should be of no surprise the recent recession has hurt consumer big time. As individuals have lost their jobs paying bills becomes tougher and tougher. And sometimes these payments are paid late or one bill is paid over another. Moreover, as you add in the foreclosure rate, it should be of no surprise that the average American credit score is dropping.
Here is a quote from USA today that indicates falling credit scores.
From the third quarter of 2008 to the first quarter of 2009 — the latest data available — the average TransUnion credit score dropped 6 points to 651, the credit bureau says. Scores fell more dramatically in states hardest hit by the housing bust: California saw a 10-point drop, for example, and Arizona, 11.
This was actually published in May and now the effect is even larger.
Also, on the other side are the lenders who are being burned by default. Many of these loads were definitely preditory, but many were to individuals who had good credit. So the overall effect could be lenders will have higher standards when it comes to giving loans. So you now have to have an excellent credit score score to get a decent loan.
Actually it is very hard to say what the final outcome of the credit market will be. Furthermore, the overall effect on the average consumer’s credit score. With the overall unemployment having the potential of being double digits makes the idea of a positive jump in the average very slim.