Credit scores fall for the first time in a decade as Americans struggle to save, keep up with payments
The national average credit score has fallen to 717
Treasury Secretary Janet Yellen talks inflation risks, credit card debt
Treasury Secretary Janet Yellen discusses inflation risks, taxes and credit card debt in an exclusive interview with FOX Business.
Credit scores have fallen for the first time in a decade as consumers struggle to make payments on time and save money, according to a recent report from FICO.
"It’s a notable milestone," FICO’s vice president of scores and predictive analytics, Ethan Dornhelm, said, per CNBC. "This is the first time in well over a decade that the score went down."
"Another likely driver is that savings rates have trended back down to zero and those savings cushions that many consumers had have disappeared," Dornhelm said.
GOVERNMENT GETS FATTER WHILE AMERICANS RACK UP RECORD-HIGH CREDIT-CARD DEBT
Credit scores have fallen for the first time in a decade as consumers struggle to make payments on time and save money, according to a recent report from FICO. (Getty Images / Getty Images)
A March blog from FICO revealed that the "national average FICO® Score held steady from April 2023 to July 2023 at 718." But according to credit score data up to October 2023, the national average credit score fell by one point to 717.
"Given that the FICO Score is a lagging, not leading, economic indicator, this suggests that the effects of high interest rates and persistent inflation may be starting to weigh on consumers, especially those already struggling to manage their finances," according to the report.
FICO also pointed to an increase in "missed borrower payments" and "consumer debt levels" as causing the drop in credit scores for Americans.
"We are pretty far removed from pandemic-level mitigation programs, so consumers are very much confronted with making good on their credit obligations with little in the way of stimulus checks or government defined accommodation programs," Dornhelm reportedly said in response to the report.
MAJORITY OF AMERICANS MADE SACRIFICES TO COVER MONTHLY BILLS LAST YEAR
A new study released Thursday by Assurance IQ found 66% of U.S. adults confirmed in a December survey that they had made sacrifices to pay their expenses during the previous 12 months, and they broke down the various tactics they used. (iStock)
A new study released Thursday by Assurance IQ found 66% of U.S. adults confirmed in a December survey that they had made sacrifices to pay their expenses during the previous 12 months, and they broke down the various tactics they used.
Researchers polled 5,000 individuals, a majority of whom earned $75,000 or more a year, and found the most common way Americans covered their bills when they were short on funds was to borrow money or turn to credit cards (41%).
Unsurprisingly, lower-income households were hardest-hit, and those making less than $75,000 were more likely to borrow funds for expenses, with 47% saying they needed to do so last year.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
FOX Business' Breck Dumas contributed to this report.
