How Many People in America Have Bad Credit?

by Lynnette Khalfani-Cox, The Money Coach on January 9, 2010

in Credit Scores


Out of the roughly 220 million Americans that have credit files maintained by the “Big Three” credit bureaus (Equifax, Experian, and TransUnion), about 1 out of 5 individuals have very poor credit, bad credit, or “deep subprime scores,” according to Experian. Research from the credit bureau found that between the third quarter of 2006 and the second quarter of 2009, the number of people with really low credit scores rose more than 16% to 40 million.

The Number of Individuals with Bad Credit Is Rising

Meanwhile, the number of people with top-notch credit scores, so-called “superprime” consumers fell in 2009 primarily due to late payments from these once highly credit-worthy individuals. One way that banks have responded to credit delinquencies – and other challenging business conditions – is by dramatically curtailing access to credit. A September 2009 report from Experian found that in the prior 12 months, banks cut credit card lines by 17% to $3.1 trillion. And more cuts are expected. Oppenheimer & Co. analyst Meredith Whitney has predicted that by the end of 2010, lenders will slash available credit to just $2.3 trillion – less than half of the $5 trillion that was available on credit cards in 2008.


Perhaps it is not surprising, then, that about 50 million adults in the U.S. have no credit files whatsoever – either because these individuals have never used traditional forms of credit, or because their credit files are “too thin” to generate a credit score.


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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

Latest posts by Lynnette Khalfani-Cox, The Money Coach (see all)

Jacqueline

I am one of the fallen and find I cannot feel badly about it. My son was let go from a job he had held for 10 years. That was 2 years ago. Literally hundreds of applications and a new Associate Degree as a Para Legal has not provided a hint of a job.
His wife walked out sometime ago and took her paycheck with her. She takes my grandchild 3 and a half days a week but offers no help with her health or dental care at all.
My mortgage is at over $50,000 in NEGATIVE EQUITY and is now in foreclosure. My Bankruptcy is weeks from closing.
From Triple A to A Zero in 2 years of this economy! No sign of light at the end of this tunnel. AND the DOW is scaring me to death, it is so unnatural!

ladykroft

And the banks are punishing who?? They may find out that it is themselves. 0 interest equals 0 gains. Frankly I’d like to see the banks go under. They’re legalized crooks.

reservemyloan

It is important to note that the lowering of credit limits as borrowers pay down debt is a force in driving down scores. Revolving available credit is a large portion of the score and being highly leveraged is not good for the overall score. While this is a creditor’s perogative, this will continue to degrade overall scores.

Thank you for the information…very well presented!

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