Posted on 07/12/2010 12:10:05 PM PDT by Qbert
NEW YORK – The credit scores of millions more Americans are sinking 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 get credit cards, auto loans or mortgages under the tighter lending standards banks now use.
Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.
"I don't get paid for loan applications, I get paid for closings," said Ritch Workman, a Melbourne, Fla., mortgage broker. "I have plenty of business, but I'm struggling to stay open."
FICO's latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO's 300-to-850 scale weren't as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis. Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.
More are likely to join their ranks. It can take several months before payment missteps actually drive down a credit score. The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual's score. Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past.
(Excerpt) Read more at news.yahoo.com ...
Yes, thank you Obama.
God forbid one should live within ones means.
The “Summer Recovery”!
Wow. Banks will have to lend to people who actually can afford it via their credit, collateral, and income. What a concept!
“It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. “
Or jobs, or apartments, or cheap insurance, or....
From huge houses, to new cars, to every electronic gadget on the planet.....oh....and don't forget the vacations - there seemed to be no end to the buying spree.
We both looked at other with disbelief and said: "How are they affording all this?"
The truth is, many of them didn't.
Heh. Pawn shops and payday loans for 45% of the population if they need quick cash for something unexpected.
When we are all blown to smithereens will Obama be impeached in hell?
Re: mt last post.
Typo correction. It should have read Hamas not hams
Another unintended consequence of Odumbos policies. I actually agree banks should have tighter credit guidelines for all forms of consumer credit and mortgages, but the very people who elected Barry will be the ones cut off as a result. Poetic justice beats ‘social justice’ every time in my book!
Sometimes it seems that a few Freepers lose sight of the fact that among the millions of unemployed are many very good people who played by the “rules” their entire lives. Hundreds of thousands of these people were hit by a tsunami not of their making and found themselves facing the unthinkable: bankruptcy, foreclosure, unemployment lasting a year or more. It’s to the point that even having that recommended six months worth of expenses in savings isn’t enough. Some of these families will NEVER recover what they lost, will NEVER be able to retire, and have become part of the underclass THROUGH NO FAULT OF THEIR OWN.
It’s something of a sport to immediately assume that everyone in dire straits either (a) overspent using credit cards (b) leveraged the value of their home to access cash for expensive vacations, toys, etc. (c) deserve what they get due to their greed or (d) all of the above. There are plenty of folks who did neither but through extended unemployment and other setbacks are financially ruined, perhaps forever.
tomorrow, the president will point out the urgent need to “fix this broken system” and push hard for “comprehensive credit score reform”.
My two sister in laws were bitching about all the taxes they have to pay now, and they are huge Libs (and Obama voters). Just wait until the Bush tax cuts run out. Than they will really see the light. Than again, probably not. I'm sure they will find a way to blame Bush for their woes.
“It’s something of a sport to immediately assume that everyone in dire straits either (a) overspent using credit cards (b) leveraged the value of their home to access cash for expensive vacations, toys, etc. (c) deserve what they get due to their greed or (d) all of the above. There are plenty of folks who did neither but through extended unemployment and other setbacks are financially ruined, perhaps forever.”
I agree. In fact there are tons of Americans in deep debt for one reason: the soaring costs of higher education. The Dems never want to admit this fact, of course, to protect the unions.
And yes, they are still Obama supporters and it's all Bush's fault. DOH!
We screwed up.
As we paid off our debt, we closed our accounts. This shifted our ratio of debt to available credit.
Before we had $170,000 in available credit and $59,000 in non-mortgage debt. We had a credit score of 780.
Now we have closed all of our accounts and paid off all but $2000 in debt. (Thank you Dave Ramsey!) Now our credit to debt ratio is about 90% maxed.
Our credit score is in the mid 600’s and we couldn’t get a loan if our lives depended on it.
I don’t mind. We never plan on having debt again, but we would like the option to refinance the house in a few years.
I gotta say, it was a serious shock when we realized that we were going to be punished for doing the right thing. Had we kept those insane lines of credit open, we’d have a score above 800 right now.
Honestly, I believe that FICO scores are designed to screw us so we can be charged higher interest rates.
If they are Democrats, they will live in the house without paying the interest payment for as long as possible, and then they will just walk away from it down to the food stamp line, unemployment line, etc...after getting all of this they will get an Obama indigent loan and start all over again.
There are no truer words ... and there are too many examples.
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