Quarter of Consumers Are Poor Credit Risks

New York, NY, July 12, 2010--Americans' credit scores continue to fall to new lows.

Figures from FICO Inc. show that 25.5% of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.

More are likely to join their ranks. It can take several months before payment missteps actually drive down a credit score. The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual's score.

On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years.

There's also been a notable shift in the important range of people with moderate credit, those with scores between 650 and 699. The new data shows that this group comprised 11.9% of scores. This is down only marginally from 12% in 2008, but reflects a drop of roughly 5.3 million people from its historical average of 15%.

This group is significant because it may feel the effects of lenders' tighter credit standards the most, FICO said.