U.S. Struggles To Maintain Credit Scores

By: Roger A Lee

With record levels of unemployment, continuous jobs losses, salary cuts and the loss of overtime the American consumer is being hurt three times, once with the loss of income and the second time with a drop in their credit scores and lastly with an increase in their interest rates, fees and penalties for falling behind. Our lenders are not forgiving or understanding. They want and demand what is theirs.

Your employer comes to you and says we have to cut over time or you have to take a 20% cut in pay to keep your job, what do you do, you get mad, but you accept. Not your creditors, they might forgive a payment or roll it to the rear but they want higher interest and late fees and penalties. This is with the exception of the mortgage industry, where they have been pushed by homeowners, legislatures and politicians to negotiate because the security they have on their loan is now to low to give them the feeling of superiority.

What really hurts the most is the decline in our credit scores. Because this is making borrowing now and in the future more difficult and more expensive. Most of us have always paid on time and stayed within our budgets, we were good credit risks and we still are, we make every effort to make each payment on time, we lose sleep at night, we stress all day because this is important to us and also part of our personalities and character.

The most recent report shows the average U.S. consumer's credit score has dropped three points to 667 since last year. The results show credit card debt dropped by 15% to $6,740 in the same time period. Wisconsin leads the pack with the lowest credit card debt in the nation at $4,637 per person in May 2011 and New Jersey has the highest with $7,545.

Even as consumers are chipping away at their credit card debt they continue to pay down their mortgage and pay off home equity loans. The average mortgage debt fell 2% to $172,957 and consumers in 13 states paid down their mortgage by more than the national average. Nevada and North Carolina were the leaders in this category, paying down mortgage debt by 7%. The average home equity debt fell 5 percent to $48,310. Auto loan debt increased 2% to $15,217 and student loans debt increased 5% to $29,680. As credit card debt goes down and personal loan debt balances increase, credit scores adjust.

Consumers in California had the highest average credit scores at 685. While 7 states fall into to the below-average category, with scores below 650. They include: Alabama, Arizona, Kentucky, Louisiana, Mississippi, South Carolina and West Virginia. Mississippi has the lowest at 634. In spite of credit card debt going down, experts see scores dropping because of prolonged unemployment. The report writer explains that Americans continue to face the added burden of the declining real estate market. As they watch their property's value continue to decline, they grapple with the decision of whether or not they should hold on to homes.

All of this make for difficult decisions for the American consumer and many sleepless nights regardless if you keep your job and your mortgage is current, everyone these days has to worry.

Article Directory: http://www.articletrunk.com

| More

Barry Norman is a contributor to and blogger at firstcredit.net. For over ten years FirstCredit.net has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or looking for your first credit card, FirstCredit.net can help you make informed decisions.

Please Rate this Article


Not yet Rated

Click the XML Icon Above to Receive Banking Articles Articles Via RSS!

Powered by Article Dashboard