Consumer Credit Scores Continue To Drop During The Current Economic Downturn
The current economic downturn has had a significant impact on consumer credit scores, with many Americans seeing their scores drop in recent months. According to a recent report by the credit reporting agency Experian, the average credit score in the United States dropped by six points in the second quarter of 2020, falling from 688 to 682. This marks the first time since 2014 that the average credit score has fallen below 685.
There are several reasons for the decline in credit scores. First and foremost, the economic downturn has led to widespread job losses and reduced incomes, making it more difficult for consumers to keep up with their bills and other financial obligations. In addition, the pandemic has caused widespread financial stress, with many consumers facing unexpected expenses related to healthcare or other emergency needs.
Another factor contributing to the decline in credit scores is the widespread use of credit cards during the pandemic. With many consumers facing reduced incomes, credit cards have become a lifeline for many, providing a way to cover essential expenses when cash flow is tight. However, increased credit card usage can also lead to higher levels of debt, which can have a negative impact on credit scores over time.
Despite the challenges facing consumers, there are steps that can be taken to improve credit scores. One of the most important is to make all payments on time and in full, as missed or late payments can have a significant negative impact on credit scores. In addition, consumers should strive to reduce their overall debt load and avoid taking on new debt whenever possible.
Finally, it is important for consumers to monitor their credit scores regularly and take action to correct any errors or inaccuracies that may be dragging down their scores. This can be done by obtaining a free copy of one’s credit report from each of the three major credit reporting agencies and reviewing it for errors or discrepancies.
In conclusion, the current economic downturn has had a significant impact on consumer credit scores, with many Americans seeing their scores decline in recent months. However, there are steps that can be taken to improve credit scores and protect one’s financial health during these challenging times.
By staying vigilant and taking proactive steps to manage debt and maintain good credit, consumers can weather the current economic storm and emerge stronger in the months and years to come.
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