Credit scores falling, more Americans lose borrowing power


While the Dow Jones Industrial Average has crept back to around 10,000 and recent data indicates that fewer consumers are defaulting on their credit card bills, new data issued by FICO shows a very disturbing trend. Roughly one-quarter of all Americans now have credit scores below 600, while more than one-third of us have scores below 650 - the historical dividing line between prime and subprime. Meanwhile, the percentage of Americans with FICO scores above 750 has dropped since the period before the recession.

Of the sub-600 category, FICO spokesperson Rachel Bell tells Walletpop via email, "We have observed a steady growth in this population since 2006." The downward slide has ramifications for individual Americans' finances as well as the economy as a whole, she adds. "More consumers falling into the lower part of the score distribution means that fewer consumers will qualify for new credit, those that do qualify will likely not receive the best interest rates," she says. This could lead to decreased spending in the future, which would crimp our economy's already-sluggish recovery.