Credit Scores Hit Record High as Economy Continues to Improve

June 2, 2017 Posted by kingcade

U.S. consumers’ credit scores reached a record high this spring thanks to falling unemployment and continued economic growth. An added bonus: The passage of time since the recession and housing market crash has helped many household balance sheets. Bankruptcies and foreclosures are now falling off Americans’ credit reports.

More than six million U.S. adults will have personal bankruptcies disappear over the next five years, according to a recent Barclays PLC report. Wiping away these events helps boost consumers’ credit scores. Lenders rely on both credit reports and scores when qualifying consumers for loans and determining interest rates.

The higher scores lead to more available credit and more activity in terms of loan approvals and credit card approvals. The average credit score nationwide was 700 in April, according to data from Fair Isaac Corp.  Average credit scores have not been that high since 2005.

The share of consumers deemed to be the most risky, with credit scores below 600, hit a new low of roughly 40 million, or 20% of U.S. adults who have FICO scores. That is a decline from 20.5% in October and a peak of 25.5% in 2010.

Consumers who filed in 2007 for Chapter 7 bankruptcy protection, the most common type of bankruptcy, in which certain debts are discharged and creditors can get paid back from sales of consumers’ assets are starting to see those events fall off their credit reports. Some 500,000 Chapter 7 bankruptcy cases were filed in 2007, a figure that ballooned to nearly 1.1 million in 2010, according to the Administrative Office of the U.S. Courts.

As credit scores rise, banks and other lenders are likely to make credit more widely available to consumers, and at a lower cost. Consumers who have a bankruptcy filing removed from their credit report experience a near $1,500 increase in spending limits and $800 more in credit-card debt within three years, according to the Federal Reserve Bank of New York.

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

 

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