The credit market is tightening, and not just for big corporate borrowers. Consumers are facing a whole new set of lending standards and are finding that the days of easy credit have come to an abrupt halt. Lenders are no longer freely offering credit to consumers as they have been in the past, often in larger amounts than a prudent borrower should take on. New lending standards in some areas are restricting loans to all but the most credit worthy borrowers.
Experian reports that the average credit score is 692, but today that average score may not be enough to get approved for an auto loan. The Free Press reported today in the Auto News Section that “Some dealers have reported loosing 20% of their sales as buyers get turned down for loans after agreeing to purchase vehicles. GMAC Financial Services said earlier this month that it would make auto loans only to customers with prime credit scores of 700 or above.” (Full article: http://www.freep.com/apps/pbcs.dll/article?AID=2008810230340)
It is important for our members to realize the scope of this tightening and pay attention to protecting and improving their credit so that they are able to borrow when they want and need to. Credit education for all members, even those with above average credit scores is important. A good way to do this is to invite members into your branches for a complementary credit report review. Help them check their report for errors and suggest strategies to improve their score. Of course, the most effective way to protect and improve a credit score is to make all credit payments on time every month. Credit can also be improved by keeping credit balances to 35% or less than credit limits, evaluating the number of open credit accounts and the levels of unsecured credit. Average consumers are not used to worrying about the ability to get a loan when needed, but times are changing.
Keywords: credit, credit score, Financial education



