Credit plays a central role in the U.S. economy. Credit scores are within the same boat as the economic recovery seems to be. Individuals have not been paying much of their debt recently. Numerous of these are because of a job loss. Others, like strategic mortgage defaulters, walked away rather than losing more money although they could pay. Living with a bad credit score is the result of this still. After the immediate relief of defaulting on debt, a long-term financial obstacle course lies ahead for them. And U.S. economic recovery may have to limp along without their help.
More individuals have low credit scores
It appears like there is no way to get mortgages, car loans, or credit cards for everyone in America. Usually, there is only 15 percent of people that fall under 600 with their FICO scores, reports the Christian Science Monitor. Now there are 25.5 percent of people with FICO scores below 600, as outlined by a recent FICO report. There is a pretty good chance based 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. Loans can be received through Federal Housing Administration programs if your score is at least a 580. Fannie Mae and Freddie Mac have many of the market under them and won’t lend for anything under 650 now. Auto loans with bad credit and credit cards are out of the picture as well.
Checking credit when hiring
Having a bad credit score might just affect your chances of getting a job. More and more companies are doing credit checks when hiring their employees, reports CNN. You could lose an opportunity for a great job by simply missing one payment. The Society for Human Resource Management did a survey showing that when companies are filling a position, 60 percent do credit checks. Only 35 percent reported checking credit in a 2003 survey, and only about 13 percent did so 1996.
Credit repair takes ages
Defaulting on debt has been common in this recession because of the relief it gives. There could be severe consequences for this of course. Usually 3 to seven years are taken to build a credit score back up. Numerous Americans could have a hard time getting out of debt with all of this bad credit.
Find more details 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/
