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Many consumers still reeling under the pressure of low credit scores

By Brian Anderson
Published: Monday, April 30th, 2012

Many customers are reeling under the pressure of poor credit scores despite an improvement in the economy. Adding to their woes is the fact that most lenders have tightened the norms for lending loans and credit cards. This implies that people with poor credit scores cannot qualify for loans at low interests, which was a privilege they enjoyed before the onset of recession.

One of the recent surveys conducted by American Consumer Credit Counseling has revealed that nearly 40 percent of the people have credit scores that lurk below the 620 mark which is the cut-off score for gaining eligibility for high interest rates and subprime credit. A little over 20 percent of the respondents who took up the survey voluntarily have revealed that their credit scores were below 580 which made it tough for them to qualify for credit cards and low interest loans.

The high unemployment rate is another factor that has contributed towards people suffering from poor scores currently. Those who were shown the door during the time of recession ended up incurring huge debts which in turn pulled down their credit scores.

Matt Paradise, American Consumer Credit Counseling’s certified credit educator and counselor said that there are certainly a large number of people who were out of work during the recession period and have amassed debts that are being tough to pay off. Paradise conducts classes on financial literacy for people all over Massachusetts. In one of the most recent classes he conducted at Worcester Housing Authority, Paradise explained to his audience about the impact of a good credit score and its benefits in helping customers avail home loans, car loans and even bag a job of their choice.

The credit score is a number which is reflection of the customer’s credit record and their repayment and borrowing history. Customers who are unlikely to default on their payments are the ones who are awarded high scores while the ones who have huge debts and defaults are given a lower score. Currently, there are three main credit bureaus in the country that track the credit reports of consumers and compute their scores.

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