The latest FICO report shows that over 43 million Americans have credit scores of 599 or lower. According to the Associated Press (AP), 25.5 percent of consumers are considered a risk for lenders and face extreme difficulty borrowing loans, a sharp leap from the historical average of 15 percent.
“I don’t get paid for loan applications, I get paid for closings,” Ritch Workman, a Melbourne, Fla., mortgage broker, told the AP. “I have plenty of business, but I’m struggling to stay open.”
FICO scores are considered a reliable indicator of consumer patterns, but Workman told the AP that he disagrees with the automated underwriting done by lending companies. Computers look at the numbers but not the actual repayment trends of the borrowers. This often results in lending to consumers who can’t repay their debt in a timely manner, thereby skewing credit score statistics.
In today’s economy, consumers with low credit score will continue to face trouble trying to open lines of credit with affordable interest rates. However,