The economy used credit in almost anything being done. Credit scores are within the very same boat as the economic recovery is apparently. Millions of Americans have reneged on their debts in the past couple of years. Some who lost their jobs had no choice. Others, like strategic mortgage defaulters, walked away instead of losing more money even though they could pay. Living with bad credit is the result of this nevertheless. All of these people have poor credit as they are trying to move on. Considering help won’t come from any of these with bad credit, the recovery will take a lot longer.
More people have low credit scores
In the past few years the recession has rendered millions of Americans no longer able to qualify for a mortgage, a car loan or a credit card. The Christian Science Monitor reports that in normal times, about 15 percent of consumers fall to the poor credit category with a FICO score under 600. In April, that figure stood at 25.5 percent, according to a recent FICO report. Credit might get a whole lot worse before it comes around again.
Low credit keeps you from borrowing
Since a quarter of America has a terrible credit score, only a quarter of all people could 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. 650 is what Fannie Mae and Freddie Mac are looking for when lending. Nobody could be getting auto loans with bad credit or credit cards either.
Job credit checks increasing
For people who reneged on their debts because they lost their jobs, finding a new job will be tougher with a low credit score. CNN reports that an increasing number of employers are using credit checks to screen potential job applicants. Missed payments on a mortgage, car loan or credit card could keep them from getting hired. 60 percent of employers do credit checks when hiring for a position, reports a survey from the Human Resource Management. In 2003, that number was at 35 percent when in 1996 it was only 13 percent.
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. The recession credit is going to be especially hard to get out of for numerous Americans.
Discover more information 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/
