Experts: Crushing Unemployment Rate Likely to Drive Average Credit Score Even Lower
New data recently released in a September 27th report by the Federal Reserve Bank in San Francisco revealed that the country’s unemployment rate (which currently hovers at nearly 10 percent) is likely to go higher over the course of the next 12 months. Because of this, experts believe that credit scores of Americans will likely continue to fall.
Currently, the average credit score in the United States is 669. This is the equivalent of a “C” grade in terms of credit worthiness. Credit scores range from the low 500s up to approximately 900. Individuals at the lower end are considered to be the highest risk to creditors while people with scores at the upper end are considered to be the lowest risk. This according to data from one of the nation’s leading credit reporting bureaus, Experian.
The most dramatic drops in credit scores came from areas of the country hardest hit by the recession and home foreclosures. This would include areas such as Las Vegas, Phoenix, Tucson, Orlando, Miami and Los Angeles. On average these areas are experiencing credit score declines of as much as 10 points or more.
Officials from Experian as well as other reporting agencies such as TransUnion and Equifax have urged consumers in recent months to monitor their credit score situation by requesting a free credit report each year. In 2003, Congress passed the Fair and Accurate Credit Transactions Act (FACT) which mandated that these companies provide individuals with a free copy of their annual credit report.
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