A recent survey by American Consumer Credit Counseling revealed that American consumers struggling to recover from the economic slowdown are being hindered by low credit scores that plague their financial lives.
Almost 40 percent of survey respondents reported credit scores below 620, which is generally considered to be the cut-off for high interest rates and sub-prime credit. More than 20 percent of respondents reported scores below 580, which would make it difficult or impossible to obtain a line of credit. Only 18 percent of respondents reported credit scores exceeding 700.
Approximately 25 percent of respondents reported scores of between 620 and 699, an indication that their financial position could be improved with financial management and budgeting.
“Nearly four years of economic sluggishness has taken a toll on people’s household finances, and it shows in their credit scores,” ACCC President and CEO Steve Trumble said. “Banks are lending again. Mortgages are being underwritten. And the auto industry is eager to get people into new cars. But the lending standards are tougher than ever, so having a clean financial profile and a good credit score is critical.”
Thirty-four percent of respondents from the northeast, the largest geographical sample in the survey, said that they did not know their credit score. A similar percentage of respondents in the South indicated that they also did not know their credit score.