Bad Credit on the Rise

The number of consumers with bad credit has risen sharply since 2007, with more than 110 million in the U.S. now affected by a negative credit history, according to a new study released by BadCreditOffers.com (http://www.badcreditoffers.com).

The surge in bad credit reflects a growing number of delinquent mortgages, credit cards, and auto loans within the American middle class, the study finds.

"Our research shows a disturbing trend in recent years," said TJ Smith of BadCreditOffers.com. "Since 2000 the median U.S. income has remained flat while the cost of virtually everything has skyrocketed, leaving the average American with less money to pay debts. And by falling behind on debt payments, their credit ratings are beginning to suffer."

Individual credit ratings can greatly impact one’s financial outlook, as banks and other lenders use them to assess creditworthiness and to determine the interest rate on a line of credit. Consumers with bad credit are less likely to gain approval for a line of credit and, even if approved, tend to have higher payments and interest charges than do those with good credit.

In recent months U.S. financial markets have come under pressure due in large part to loans given to those with bad credit, referred to as subprime loans. The inability of the borrower to repay the loan has created a ripple effect across the financial industry, leading to a global credit crisis and a $700 billion bailout by the U.S. government.

The credit crisis especially affects those with bad credit, as lenders tighten their approval standards in reaction to economic conditions in the U.S. and abroad. Analysts expect these conditions to worsen, which could lead to more credit problems for the American consumer.

"Unfortunately this trend toward bad credit will likely continue in the near-term, as people struggle to make payments on their homes, their cars, and their credit cards," Smith said. "In fact, we expect a spike in credit card defaults in 2009 similar to what we’ve seen in the mortgage market in the last 24 months, leading to further deterioration of credit ratings for many Americans."
       
About BadCreditOffers.com
Since 2005 BadCreditOffers.com has served as a leading industry resource for consumers with bad credit, attracting millions of visits to its website in that time. Its staff researches the financial marketplace and compiles information on bad credit credit cards, loans, and other offers geared toward consumers with a poor credit history.