Credit Education 101
Website CertifiedPrivacy Protected
Credit Education > Credit Score > Revaluing Credit Scores after the Financial Crises

Revaluing Credit Scores after the Financial Crises

By Janet Lacey
Published: Thursday, December 31st, 2009

The numbers of assets and saved up money are not the only things that matter in the financial world. There is a three digit number that can make any credit company go from dismaying a loan application to become more than willing to help the loan applicant. The FICO score or the credit score is the number that all credit companies pay close attention to. This number is simply the numerical translation of the credit bureaus’ report on the credit worthiness of the borrower. This number is important to many credit companies because this number indicate the general risk that the company is taking for giving a loan or installment to the owner of the credit score or the borrower.

In recent years this number is starting to become a large part of one’s financial concern. This sudden importance may have been because to two major changes in the global economy. First, things are getting more expensive every day. The prices of good and commodities are now shooting up beyond the roof. Many people who used to can afford these goods are now forced to get credit card accounts and other debt accounts to pay for these goods. In short the market is becoming more expensive and there are needs which cannot be paid in full.

Secondly, the global financial recession has made the credit scores of individuals more valuable. The recent recession was caused by a major financial trend which is the credit crunch. This financial trend happens when the market has exhausted its surplus on good debt services. The recession was the benchmark of a good example of how a credit bubble will burst in the wrong economic landscape.

The American economy made a lot of people get credits and made them too lazy to pay for those credits. No actual returns of credit investments, which are debt payments, were received by the credit companies and because of that the credit bubble blew. After the recession, the credit business went through a state of shock and even paranoia. No company is willing to give debts to those who would want to get it.

Many credit companies to be able to maintain operating where forced to set a high bar in the requirements to get a credit account. They only use one qualification- high credit scores. These three digit number suddenly become more popular in the United States. The importance that was put on it by credit companies made it a major concern in the American economy.

In a way, the recent financial disasters were the turning point of many borrowers to change their credit lifestyle. Relatively, more borrowers are now paying and settling their bills on time since payment history is large part of the whole credit score. Credit cards are now being maintained at long operating period with low balances. Long used credit cards are proofs used by credit bureaus to establish the credit worthiness of the borrower because credit card companies would not keep a credit card account open if the owner is constantly delinquent in paying. And the most important of all, individuals are now more concern in checking their credit reports at least once in a year. Individuals suddenly became aware that their chances of disputing wrong factored- in records in their FICO scores can be found in their reports.

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.