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U.S. FICO scores hit new lows

Person pulls debit or credit card from wallet.

TEXT OF INTERVIEW

Steve Chiotakis: Fewer people are able to spend money that's extended to them by way of credit. The credit consulting company FICO says millions more Americans have credit scores that could prevent
them from getting credit cards or loans with the tighter lending standards banks now use. Figures show that more than a quarter of all consumers -- more than 43 million people - now have a credit score of 599 or below, marking them poor risks. Dave Jones is president of the Association of Independent Consumer Credit Counseling Agencies -- quite a mouthful there -- he's with us live from Fairfax, Va. Good morning, Dave.

Dave Jones: Good morning Steve, how are you?

Chiotakis: Doing well. What's causing this sir?

Jones: Well, a more conservative view on the part of creditors nationwide. They're not as interested in loaning money in what they consider to be high-risk areas as they were in the past.

Chiotakis: So all right, more conservative. Would this have happened before regulations of the banks?

Jones: Well it wouldn't have happened before the financial meltdown that we had, and of course the ensuing regulations. I think they would have been a lot more open with their credit than they are today.

Chiotakis: What about this, I think there's some paradox going on, because the same report that came out today from FICO says all right, we have all these people, a quarter of the population, the consumers that are below 599, and then we have an increasing number who are above 800. What's going on there?

Jones: Yeah we have not seen that in the past. What's happening is people are paying off their credit and they are not borrowing to the extent that they did in the past. So we see a lot more people with a good debt-to-income ratio than we did in the past.

Chiotakis: Well, all right. Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies, joining us from Fairfax, Va. Thank you, sir.

Jones: Yes, sir.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.
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I think there needs to be more investigations into the credit score issues. It's not just about taking out loans or get credit cards. People are wising up and realizing they can get by without credit cards and now those people have to suffer because your score stays stagnant if you dont borrow and pay off to earn more credit and why is it so easy for your score to plummit if you miss one payment yet takes forever to raise the score back up? I feel our financial institutions are taking advantage of us and punishing us at the same time just because they caught with their hands in the cookie jar and had to rely on the government to bail them out. Where is my bail out?

I disagree with the comment that, "Credit scores only matter if you are in the market for credit." A bad credit score can prevent you from being employed, renting an apartment, or getting a bank account.

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