Credit plays a central role within the U.S. economy. Credit scores are in the exact same boat as the economic recovery appears to be. Millions of Americans have reneged on their debts within the past couple of years. Some who lost their jobs had no choice. Many would rather have stopped paying than lose money into a home. Either way, these individuals face the challenge of living with bad credit. It is going to be quite hard to move on through this economic crisis when nobody has good credit. And U.S. economic recovery could have to limp along without their help.
Low credit scores probably
It appears like there is no way to get mortgages, car loans, or credit cards for anyone in America. The Christian Science Monitor explains to its readers that there was, historically, 15 percent of people with a Fico score of 600 or less before now. Now you will find 25.5 percent of people with FICO scores below 600, according to a recent FICO report. Credit might get a whole lot worse before it comes around again.
Bad credit score means never getting to borrow
Only a quarter of all Americans could be able to get loans for things considering one in four has a credit score below 600. 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. But none will qualify for loans guaranteed by Fannie Mae or Freddie Mac, which account for the lion’s share of the market and typically require credit scores of at least 650. Getting auto loans or credit cards will also be tough.
Job credit checks increasing
Anyone who lost their job can have a hard time finding a new one with a bad credit score. Increasingly more companies are doing credit checks when hiring their employees, reports CNN. You can lose an opportunity for a fantastic job by simply missing one payment. 60 percent of employers do credit checks when hiring for a position, reports a survey from the Human Resource Management. .
Rebuilding a credit score can take years
Defaulting on debt has been common in this recession because of the relief it gives. There can be severe consequences for this of course. Generally 3 to seven years are taken to build a credit score back up. The recession credit is going to be especially hard to get out of for many Americans.
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/
