One-Fourth of Americans Now Have Sub-600 Credit

By:: Peter King | July 13, 2010

Over one-quarter of Americans now have credit scores below 600, ranking them as a poor risk for lenders and making it difficult or even impossible for them to obtain mortgages, car loans, credit cards or other consumer loans.

New data from the credit reporting firm FICO shows that more than 43 million people now have credit scores below 600, up from 25 million a few years ago. Historically, FICO says that only about 15 percent of borrowers have had credit scores under 600.

The numbers of consumers with poor credit has been driven up by the twin economic and housing crisis, with foreclosures, unemployment and other debt problems driving down many consumers’ credit scores. A foreclosure alone can drive down a credit score by 150 points, knocking someone out of the mid-700s down into the lowest categories in one fell swoop.

Ironically, even as the number of people with poor credit has risen, the percentage of borrowers with outstanding credit has increased. Nearly 18 percent of borrowers currently have credit scores of 800 or better on the 300-850 FICO scale, up from a historical norm of 13 percent. Even so, their share has declined a little less than 1 percent since the housing market collapsed in 2008.

According to the Associated Press, the crimp in credit is a major reason for the sluggishness of the economic recovery. Because consumers heavily relied on debt to fuel spending in recent decades, the lack of credit means spending cannot return to those same levels, even if consumers were not voluntarily restraining spending as well.

Since consumer spending is typically assumed to make up about 70 percent of the economy, anything that puts the brake on spending is going to have a major impact on the overall economy as well.

Start here to compare debt consolidation rates from top lenders in our network

Call For Rates

800-419-1494

Speak to a lender now.

We will match calls to our toll free number with our network of lenders.

See Today's Rates

Mortgage Quotes

National Rates

Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
5/1 ARM	2.75

Rates may contain points

Compare Rates »

Browse Mortgage Rates

Featured Guides

Browse our comprehensive guides to popular topics related to mortgage and personal finance.

Bad Credit Calculators

Mortgage Loan Directory and Information, LLC or Mortgageloan.com does not offer loans or mortgages. Mortgageloan.com is not a lender or a mortgage broker. Mortgageloan.com is a website that provides information about mortgages and loans and does not offer loans or mortgages directly or indirectly through representatives or agents. We do not engage in direct marketing by phone or email towards consumers. Contact our support if you are suspicious of any fraudulent activities or if you have any questions.

Mortgageloan.com is a news and information service providing editorial content and directory information in the field of mortgages and loans. Mortgageloan.com is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers.