Even with Americans cutting their spending and becoming more budget-conscious, credit scores have plummeted.
The average credit score fell to 674, according to consumer credit services company Credit Karma. That’s down 20% since 2007, yet the minimum score needed to get a good deal on a loan or new credit card has topped 720, WalletPop reported.
What it Means for You
With new credit card policies on the horizon, your ability to get a credit card and the type of card you’re eligible for is expected to change dramatically.
Until those changes take effect next year, experts expect to continue seeing credit card limits slashed and interest rates raised.
However, amid the recession, consumers seem to be improving their spending habits, cutting down on restaurant and entertainment spending, and in general rethinking the concept of “disposable income.”
Improving Your Credit Score
If your credit score could use some improvement, here are a few tips from credit reporting agency Experian:
Pay Your Bills on Time. Payment history is one of the single most important factors in determining a score. Delinquent payments and collections can have a major negative impact on a score.
Pay Down Your Debts. Pay off debt rather than moving it around. Owing the same amount but having fewer open accounts may negatively impact a score.
Low Balances. Keep balances low on credit cards and other revolving credit. High outstanding debt can affect a score.
Apply for New Credit Sparingly. Apply for and open new credit accounts only as needed; don't open accounts just to have a better credit mix.
What the New Credit Card Bill Means for You
Credit Card Reform Limits Easy Credit
What's Wrong With Credit Card Reform?