Credit plays a central role within the U.S. economy. Credit scores are within the very same boat as the economic recovery appears to be. Individuals haven’t been paying much of their debt lately. This is circumstantial for numerous, such as with a job loss. Numerous individuals quit paying their debt since the loss of money wasn’t worth it to them anymore. The end of all this tends to be individuals who now have to live with bad credit. After the urgent relief of defaulting on debt, a long-term financial obstacle course lies ahead for them. And U.S. economic recovery will have to limp along without their help.
Chances are you’ve a low credit score
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 explains to its readers that there was, historically, 15 percent of individuals with a Fico score of 600 or less before now. Now there are 25.5 percent of people with FICO scores below 600, according to a recent FICO report. The continuing high rate of foreclosures and unemployment and a looming second dip in housing prices suggest the credit picture could worsen before it improves.
Can’t do anything with low credit
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 Federal Housing Administration programs will let credit scores be as low as 580 and still give out loans. Fannie Mae and Freddie Mac have most of the market under them and won’t lend for anything under 650 now. Getting car loan or credit cards will also be tough.
Poor credit makes for a bad employee
Any person who lost their job may have a hard time finding a new one with a poor credit score. CNN shows us that there have been a lot more hiring managers checking credit before hiring a new employee. You could lose an opportunity for an excellent job by simply missing one payment. According to a survey by the Society for Human Resource Management, 60 percent of employers are using job credit checks when filling at least some of their openings. Only 35 percent reported checking credit in a 2003 survey, and only about 13 percent did so 1996.
Takes longer than you might think to repair credit
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. Although you may have cash til payday, you will find other consequences you need to look at. 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.
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/
