The economy used credit in almost everything being done. Credit scores are within the same boat as the economic recovery is apparently. It appears like individuals have given up on their debt as it is no longer being paid by most. Numerous of these are because of a job loss. Others, like strategic mortgage defaulters, walked away rather than losing more money although they could pay. Either way, these people face the challenge of living with poor credit. It is going to be pretty hard to move on through this economic crisis when nobody has good credit. Considering help won’t come from any of these people with poor credit, the recovery will take a lot longer.
Credit scores tend to be low
Hardly everyone can get a mortgage, car loan, or credit card now and days. The Christian Science Monitor reports that in normal times, about 15 percent of consumers fall into the poor credit category with a FICO score under 600. In April, that figure stood at 25.5 percent, as outlined by a recent FICO report. Credit might get a whole lot worse before it comes around again.
Low credit scores left out of lending
Since a quarter of America has a terrible credit score, only a quarter of all people can be able to take out loans. The Wall Street Journal reports that some may be able to get mortgage loans through Federal Housing Administration programs, which allow for credit scores as low as 580. Fannie Mae and Freddie Mac have most of the market under them and won’t lend for anything under 650 now. Getting auto loans or credit cards will even be tough.
Best of luck getting a job with bad credit
For people who reneged on their debts because they lost their jobs, finding a new job could be tougher with a low credit score. CNN reports that an increasing number of employers are using credit checks to screen potential job applicants. You can lose an opportunity for a great job by simply missing one payment. The Society for Human Resource Management did a survey showing that when companies are filling a position, 60 percent do credit checks. The number jumped there from 1996 when it was 13 percent to 2003 when it was 35 percent to where it is now.
Credit repair takes ages
Defaulting on debt has been common in this recession because of the relief it gives. There can be severe consequences for this of course. A damaged credit score can take between 3 to 7 years to bring back to where it was. Numerous Americans may have a hard time getting out of debt with all this a bad credit score.
Discover more info on this subject
Christian Science Monitors
csmonitor.com/Money/new-economy/2010/0727/Credit-scores-slide-downward
Wall Street Journal
blogs.wsj.com/economics/2010/07/31/number-of-the-week-default-repercussions/
CNN Money
money.cnn.com/2010/07/22/news/economy/credit_checks_for_job_applicants/
