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Credit Card Company Reveals Study Results, Bad Scores on the Rise

By Sally Maison
Published: Sunday, September 6th, 2009

A recent study made by Experian shows that numbers of people who have bad credit scores are rising. Experian, which is one of the three major credit bureaus in the United States, says that more Americans are getting behind on their mortgages. There is a 15% rise on the number of consumers who have severely delinquent mortgages.

Credit Card Company Reveals Study Results, Bad Scores on the RiseExperian adds that consumers who are frequently late in paying mortgages are seeing their scores drop lower than they did in previous years. In 2007, the average credit score of people with severely delinquent mortgages is 605. Last year, it was down to 599. Although the drop in average credit score is not huge, experts tell consumers to be more mindful of mortgage obligations. Experian advises consumers to avoid repossessions, foreclosures, collections, bankruptcy, charge-offs and voluntary surrender. Mortgage problems can have serious effects on credit scores.
On the other hand, people who keep mortgage records good maintain outstanding credit scores. As of February last year, average score of accounts who have no delinquencies is 750. That is an excellent score in the 300 to 850 scale established by Fair Isaac Corporation (FICO).
In this same study, California ranks as the worst mortgage state when it comes to percentage of severely delinquent accounts, which is at 12.4. It is followed by Florida at 8 percent and Texas with 6.3. This Experian study also reveals that Washington DC has the lowest credit score for severely delinquent mortgages, which sank at 583.

Real estate analysts view the worsening mortgage situation as a result of the changes in the housing market. Again, experts link the policy changes made by real estate businessmen to the new credit laws.

Consumers with low credit scores will find it more difficult to apply for new loans, and even if they do get one, they will be given higher interest rates. Bottom line is that they will find it more difficult to refinance previous loans. This will only lead to more foreclosures and bankruptcy filing. However, credit specialists tell consumers to cheer up. After all, bad credit scores can still be fixed. A trend now for bad scorers is to engage in credit repair programs.

They are offered by many credit help companies. However, even greater news is that consumers need not avail of any credit counseling services. Most can repair their credit scores on their own, as the Federal Trade Commission says on its website. They prepared easy-to-follow guide to help consumers realize that it is not such a bad day at all.

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