More Americans' Credit Scores Sink to New Lows

Americans' credit scores are getting worse.

The latest analysis by FICO Inc., based on consumer credit reports as of April, shows that millions more Americans have credit scores that could prevent them from getting credit cards, auto loans or mortgages under the tighter lending standards banks now use.

Restricted access to credit is one reason for the slow economic recovery.

About a quarter of consumers - 25.5 percent, or nearly 43.4 million people - now have a credit score of 599 or below, marking them as poor risks.

That's a big jump over the historical rate of 15 percent of the 170 million consumers with active credit accounts (or 25.5 million people) falling below 599.

Yet, the number of consumers who have a top score of 800 or above has also increased in recent years.

[stevador39]

Everyone is legally entitled to one free credit report per year, per credit reporting agency. They are TransUnion, Equifax, and Experian. Contact them directly by mail or by their 800 numbers. Don't use a third party reporter. The '3rd party guys are generally scammers.

[Another_Devil_Advocate]

Credit scores are designed for the benefits and protection of Banks -plain and simple; it is not intended for the benefits of consumers. It is unfortunate that bank uses this guideline instead of analyzing individual?s credit application on case by case basis. There are many factors for the caused of low credit scores ?a loss of job or income, a sickness or even death in the family and usually, it is beyond the control of many individuals.

Other victims of low credit scores are people that are looking for jobs. An employer can use credit scores in screening job applicants and there are no law that prevents them for doing that.

Again, another blow to the consumers and job applicants.

[stevador39]

Excellent comment.

[zippiez]

These businesses are amoral and unethical.
They want no risk and guaranteed payback.
They gave up on the pound of flesh because no one will pay an outragious amount for it.

Oh, that's right, this hasn't changed from the time they came into existence and they will continue this way until the end of time.

[kenhamlett]

Everyone misses the point. Having a low score is not necessarily a bad thing. The ratings are base on debt you have or have had in the past. The high score shows you can not live within your means and tells the credit companies you are a sucker.
The rating system is a foolish attempt to quantify risk vs rewards for offering credit. If the numbers say there is no reward in doing business with you then your score drops. Thus if you have no debt and do not use credit regularly they don't want you. What you should know is that if you don't rely on credit you don't need them.
Simple enough. Don't charge it.

[tsigili]

Don't worry.......they haven't hit bottom yet.

[Resin-Smoker]

Last time i checked, its in credit reporting agencies self-interest to keep people at a higher rate. So why in the hell does everybody act all surprised that they are finding it harder to get a good rate, or get rates that accurately reflect their history?

Often alot of bad information is being passed into someones credit history and its up to the individual to prove or disprove it. Even then its often a long drawn out fight to get the reporting credit agencies to correct the situation. Because, as Ive stated earlier, its in their interest to keep you down.

One of the great ironies with credit, is that the people who most need it cant get it and the people who the banks beg to give it to dont need it. Everyone else is caught in the middle trying to scrape by while our rights are abused in the pursuit of the all mighty dollar.

[Izzy53]

I think that it is unfair that your credit score takes a hit everytime someone takes a look at it. Any credit account that you have can go in and check on your credit anytime they want and that goes against your credit score. They need to change that. Just because a company checks it doesn't mean you are applying for credit. There should be a code that differentiates why it is being looked at. I also feel that the only solution to not being a slave to your credit report is to stop buying anything you cannot pay cash for. Of course that will put a lot of stores out of business and cause people to be out of work. But so be it.

[tomanyt]

"...more Americans have credit scores that could prevent them from getting credit cards, auto loans or mortgages under the tighter lending standards banks now use." -- People will still be able to get these things...they will just jack up the interest rates.

[book_of_wally]

I dont know what my credit score is. Its probably very low since I pay my entire credit card balance off every month, buy new cars every 2 years with cash, paid cash for my home, basically I do things they say not to do but I hate paying interest.

[zippiez]

Obviously, you don't need credit cards.

[pragmatist1]

I don't feel sorry for anyone in this situation. The downturn of the economy proved that too many were living beyond their means and were living superficially. They were given too much credit to begin with without really being credit worthy or financially stable. This includes people with now foreclosed mortgages and multiple credit cards that have gone unpaid. The financially careless shouldn't be given any more loans, secured or unsecured, or credit cards until they can prove themselves financially worthy and stable.

[tomanyt]

I will respectfully disagree with you. Banks are suppose to check you debt to income ratio to see if you qualified for credit cards, loans, etc. Clearly they didn't do that. They gave loans and credit cards to anyone who asked. If anyone is at fault its the banks themselves. Sure we do live beyond are means but the banks allowed it to happen.