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July 13, 2010

  • News:  After Crisis Clean Up

    The past two years have been difficult for Americans as well as countries worldwide. A large number of nations underwent a recession as economies, housing markets, and the credit card industry suffered great losses. Home values plummeted and credit card companies cancelled cards and slashed credit. The nation watched as Americans who couldn't sell their homes because they owed more on it than it was now worth, walked away. The foreclosure rate scored to the highest in the history of the nation. As unemployment reached the highest since the Great Depression and credit card defaults rose right alongside.

    As the nation begins a slow turn toward the recovery process, the credit card industry reports that card write-offs are decreasing. The stock market has also risen and lenders report that cardholders are doing a better job at paying down credit card debt. There is, however, some unsettling news as reported by FICO. As the economy, housing market, and credit market suffered great losses, consumers' credit also took a major hit. According to the FICO report, approximately 25 percent of all Americans currently have a credit score of less than 600. Furthermore, more than 33 percent have scores below 650 while premium cardholders with scores above 750 continue to decline.

    While the economy begins a slow climb to recovery, Americans will continue to deal with a sluggish job market, real estate crash, and a broken credit card industry. Experts do not expect to see an overall immediately improvement with the average FICO score because some of the variables that affect the score will remain with the consumer for a number up years. The effects of bankruptcies and foreclosures are long-term and do not go away overnight. On the upside, increasingly positive numbers across the financial industry, trading industry, and housing industry indicates that the recession is over and Americans can proceed with caution as they begin to rebuild their financial health.

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