Phoenix, AZ -- (SBWIRE) -- 03/07/2013 -- Although by defaulting they may have more immediate money to spend in other areas of their life, credit unions will want nothing to do with lending them money. The reasons are wide ranging.
- Without a good credit score Americans will not be able to borrow money for large purchases.
- The housing market in turn will not improve and the auto industry will continue to flounder.
- Will the trend continue? Before the recession only 15% of Americans had scores lower than 600.
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Bad Credit, Bad for Everyone
Bad credit has universal implications. With so many people not able to take out loans, the banks that originally offered these loans have become afraid. They lost large amounts of money from people declaring bankruptcy, and are now far more reluctant to hand out loans. This includes big businesses. With large corporations unable to take out loans to make large transactions business has become stagnant. It is a cycle that is difficult to correct. More people end up losing jobs because there is no money to support lent to support a large workforce.
Who Suffers Most?
The housing market and the auto industry also suffer. Why? Because these typically are the two largest purchases people make in their lives. A house is exceedingly difficult to buy without credit, and virtually impossible with a score lower than 600. With 25% of Americans unable to buy homes, and teetering on unemployment, the prospects for long term economic strength is uncertain.
What's the Forecast look like?
Uncertainty is what causes economic strife. If the people who have money are not confidant in lending, than money stays in the hands of a small percentage while everyone else grows hungry. Fortunately there are now more quick ways for people to repair bad credit history. Companies and entire industries have developed to help people with bad credit history make repairs to their score. These are known as credit restoration companies. The auto industry has begun to strengthen now that lenders are competing to offer low interest rates even to people with bad credit. It has become slightly easier now for people with low credit scores to remain financially viable to lending companies.
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