Posted
by Erica Nochlin
on Thu Oct 2, 2008
Last updated
Oct 3, 2008
While Wall Street and lawmakers battle it out, more consumers are facing financial fallouts. Credit scores considered 'acceptable' are changing, and for many, it's harder to get a loan.
Joanna Kollmeyer with Consumer Credit Counseling Service says there is a financial crisis right now. "There are job losses, they're having to use credit to make up for that income, people's budgets don't have a lot of room in it to take note of that."
She tells me many people's credit scores have gone down over the past year. At the same time, lenders are looking for higher scores and giving higher interest rates, creating a vicious cycle.
She says one of the main issues right now is problems with mortgages, and some of that goes back to credit score changes.
"Now with the housing market and everything, you probably have to get around a 620 or 640 to get a house loan versus the middle 500s."
In fact, the Attorney General's consumer blog shows lenders and creditors are raising their standards to this -- up 20 to 40 points -- meaning if you have 620 credit score, you're moving from what used to be good, into what's now considered 'bad'.
But your credit score isn't all that matters.
Kollmeyer says, "Maybe you've built back up your credit score to what you consider to be a good score, but you had a late payment three months ago, because you had that late pay in there, their going to be looking at that."
So, it now takes a cleaner credit history before you can get a loan or a good deal
"They're looking at a lot more documentation then what they used to, a lot of people will now look at bank statements and tax returns, where before they may not have looked at that," Kollmeyer says.
If you go in for a loan, we're told you can expect the last 12 months of your financial history to be scrutinized. It may also take longer as they look up all those details.
For Ways to Improve Your Credit Score, Go to Bankrate.com
