In today’s Default Servicer News (DSNews.com) an article came out that speaks to a big change in how consumers are handling credit defaults comparing credit cards and housing. The article I’m referring to can be found at this link. Reversing a long-time trend of consumers defaulting on credit cards prior to home loans, the ratios of risk have come also to parity.
Why would this be? Well, if you’ve not been living under a rock for the past 3 years or so, you’ll have heard that real estate took a huge hit and values in many areas are anywhere from 20-50% below their historic highs of just a few years ago. So, can we say a huge, “duh!” to the folks at FICO? There are many people who realize they may lose their home, or who don’t want their home anymore because it’s lost so much value and it restricts their future life choices, so they’re more willing to let that go versus a credit card that they may need to rebuild their credit later, or even to just continue using since most bankcards are shutting down card use and forcing repayment plans for anyone 60+ days overdue on payments. Plus, longevity of credit is a big scoring element for FICO so keeping a card you’ve had for 10 or more years may be on the minds of some of these consumers.
Credit is a discussion that we have to have regularly with our clients because it affects the ability to get a mortgage and whether or not the client qualifies for the best rates available. If you’re a person who’s in need of looking at your credit situation and would like to talk to someone in the credit repair industry who is top-notch, I would recommend this fellow, who has recently been helping teach classes for Team Reba for 1st time home buyers:
Roger Cruise, Sr. Credit Consultant 1-888-385-6742 xt 302
LCA Publishing, Seattle WA
