Tighter lending standards become normal along with lower credit scores

Millions of Americans are seeing credit scores fall to new lows. Lower credit scores and tighter lending standards have economic recovery caught between a rock and a hard place. 43 million individuals, or 25.5 percent of consumers, have a credit score below 599 as outlined by FICO Inc. .

Categories that are the lowest with credit scores have millions in it

plunging credit scores are canceling out positive things such as no interest auto loan applications and low mortgage rates. The Associated Press reports that FICO’s findings show an additional 2.4 million individuals fell to the lowest credit score categories during the Great Recession. Generally only 25.5 million people, or 15 percent of 170 million, fell below a 599 score. The only option for some of these people to get short term credit may be personel loans, fast cash loans advances, or installment loans.

A lifeline is needed for many who have low credit scores

Already at record lows, the number of consumers with credit scores below 599 is expected to increase. It was reported by the Associated Press that scores don’t go down for many months after the first missed payment. Underemployed or out of work people has hit 26 million according to the Labor Department. 150 points can be deleted from a credit score with a foreclosure. Even with a strong short term credit history, years might pass before credit scores are restored again. These people could be saved, luckily, by these short term credit alternatives.

Lending standards make it impossible to higher credit scores

Leave it to banks to do their part to lower credit scores. Creditcards.com reports that by cutting credit lines and increasing interest rates, banks are lowering their customers’ credit scores. FICO tends to compare debt levels to credit limits. When you will find fewer credit lines, it looks like somebody has more debt even when it hasn’t changed at all. Plus, higher interest rates make it tougher to pay off existing debts. And when the bills aren’t getting paid, talking to the banks about personal loans happens too.

Is easy credit the only way for the economy to recover?

Consumer spending depending on credit fueled an unsustainable U.S. economic boom that was destined to bust. The Dallas News suggests that the FICO report on low credit scores exactly why the economy can’t recover. consumers who can’t borrow money can’t buy houses and cars, invest in home improvements, or make other major purchases that drive economic growth and give businesses reasons to hire workers and ramp up production. Americans have to start spending if their credit scores are ever going to improve and if the economy is ever going to get better. That will be amazing considering the economy is driven by consumer spending.

More details accessible at these websites

Associated Press
google.com/hostednews/ap/article/ALeqM5g74qg6iCDzFlCHhjsiBGFIHAiJPQD9GTIVU80
Creditcards.com
blogs.creditcards.com/2010/07/fico-credit-scores-fall.php
Dallas News
dallasnews.com/sharedcontent/dws/dn/opinion/editorials/stories/DN-ourcredit_00edi.State.Edition1.6ff689.html