Economic Recovery Stopped By Millions With Low Credit Scores
Posted at by ifydcat on category CreditCredit plays a central role within the U.S. economy. Economic recovery and also the credit scores for a big chunk of the U.S. population are mired within the very same pit of quicksand. Seems like like people have given up on their debt as it is no longer being paid by most. Some who lost their jobs had no choice. Many would rather have stopped paying than lose money into a home. Living with bad credit is the result of this still. It is going to be fairly 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. Source of article – Low credit scores may exclude millions from economic recovery by Personal Money Store.
More individuals have low credit scores
It seems like there is no way to get mortgages, car loans, or credit cards for everyone in America. Generally, there is only 15 percent of people that fall under 600 with their FICO scores, reports the Christian Science Monitor. In April, that figure stood at 25.5 percent, according to a recent FICO report. There is a quite good chance depending on another dip in housing prices and continuing foreclosures along with unemployment that there can be more individuals going below 600 before there is any improvement.
Bad credit score means never getting to borrow
With 25 percent of Americans with credit scores below 600, one in four won’t be able to borrow money for a major purchase for quite a while. 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 many of the market under them and won’t lend for anything under 650 now. Nobody will be getting auto loans or credit cards either.
Bad credit makes for a bad employee
For individuals who reneged on their debts because they lost their jobs, finding a new job could be tougher with a low credit score. CNN shows us that there have been a lot more hiring managers checking credit before hiring a new employee. Missing any of your payments might just mean you won’t get a new job. 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.
Rebuilding a credit score can take years
One thing people have done often lately is defaulted on loans; they would rather have the money than be putting it into something they don’t need. Even though you may have fast cash, you will find other consequences you need to look at. Usually three to seven years are taken to build a credit score back up. Bad credit brought on by the recession will make it more difficult for numerous Americans to work their way out of it.
Further reading
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/