SAN FRANCISCO (7/20/09)--Credit unions may get questions from their members about credit scores, especially if the members have been working off their debt and find their credit score is less than a year ago. While debt for the average American is down, many are seeing lower credit scores. Credit card companies that tightened their credit available to consumers the past two years have impacted their cardholders' scores, according to a survey by Credit Karma, a San Francisco-based online research and education business. When a card company reduces the credit card limit and the consumer still uses the card the same as always, the consumer is tapping into a greater percentage of the current available credit than under the older, higher limit. This affects the credit score (BusinessWeek.com
July 14 and WalletPop.com
July 16). Credit score bureau Experian says that American's median score at VantageScore --a competitor to the well-known FICO score invented by Fair Isaac--fell eight points in March--down 1% from the year earlier. TransUnion's average TransRisk score showed a similar 1% decline in first quarter over first quarter 2008, reported BusinessWeek.com
. In May the average U.S. consumer's credit score was 674, down nearly 20 points since 2007 according to Credit Karma and Experian. In 2007, the average credit score for the first six months was 692. Equifax, however, said that in May the average Equifax Risk Score rose 0.3% from May 2008. It attributes the slight decrease to the fact that Americans are using credit cards less frequently, are paying off balances in full, and are staying current on their payments. These consumers are balancing out the delinquent borrowers. Roughly 72% of consumers saw their scores improve or stabilize. Nearly 38% of the credit scores rose, while 34% had the same credit score in June that they had the month before. That compares to 32% who had the same credit score in May as they did in April. About 28% of those surveyed saw a decrease in their June credit score. Credit Karma reported last week that the average consumer credit card debt at the end of June declined by $134 from the first quarter. Based on the credit histories of more than 44,000 of the company's customers, the average consumer with debt had:
* $6,938 in credit card debt; * $206,427 in home mortgage loans; * $54,370 in home equity loans; * $14,539 in auto loans; and * $27,201 in student loans.
Midwesterners had the lowest amount of debt.