June 6th, 2017 8:44 AM by Steven Hofberg
On Tuesday May 30 the Wall Street Journal reported that average credit scores for U.S. consumers reached a record high. After the financial crisis beginning in 2008, the percentage of consumers with poor FICO scores (those deemed most risky) reached almost 26%. According to Fair Isaac, the creator of the FICO model, as of April 2017 the share of risky FICO scores had plunged to 20%.
Several factors were cited for this substantial improvement; among them an improving economy, housing value gains, and low unemployment. But the most important factor seems to be the passage of time. As the Great Recession recedes in our collective rearview mirror, those consumers who experienced serious financial difficulties (delinquencies, foreclosures, bankruptcies) are now seeing those bad marks being deleted from their credit reports. According to a report by Barclays PLC, more than six million U.S. adults will have personal bankruptcies disappear from their credit records over the next five years. No doubt this will translate into even further credit score gains in the near future.
If you or one of your clients have not checked their credit score lately, maybe now is the time to do so. You may be able to save substantial interest expense on your loans.
Have a great week!Steven Hofberg Operations Manager Residential Mortgage Center Inc.