What's My Credit Score and What It Means In Recession

As the recession keeps hammering, more people see their all-important fico scores falling away. The increasing number of foreclosures and credit card defaults are adding to many household's debt and low fico scores. Star Tribune article offers some advice what you can do about it.
Along with the economy and the financial sectors, the housing market is in a free fall and home mortgage lenders are tightening the purse strings.
As creditors continue to tighten credit, your score will become even more important in determining whether you are eligible for a loan and what kind of rate you'll get.

Millions of consumers' scores have dropped, resulting in more pricey for them to len money -- or even impossible if the score has dipped low enough.
" Now you have a poor credit rating, making it tougher for you to recover," credit expert Evan Hendricks told the Tribune.
The dropping credit scores are a reflection of the times: plummeting house values, higest foreclosures and the widespread recession. Simultaneously, lenders are implementing stricter standards to borrowers, including demanding higher fico scores.
"For better or worse, our economy is very dependent on consumer spending," Hendricks said. "If tougher requirements mean that citizens with good credit rating can't get loans ... that could dry up the recovery or slow it down."
Most people may not know their current credit score, but they've seen enough marketing by the credit-score firms, including Minneapolis-based Fair Isaac Corp., to know that the number, which can vary from 300 to 850, has become a de facto national ID. Creditors depend on FICO score, but so do employers when screening job candidates, insurers when imderwriting policies for homes and autos, and landlords when renting an apartment or a house.


American consumers carry $2.56 trillion in consumer debt, up 22 percent just since 2000, according to the Federal Reserve. The average household's credit-card debt is $8,565, up almost 15 percent from 2000. And a report out last month said borrowers with good credit now make up the largest portion of foreclosures.


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