Evidence Credit Scores Are Dropping – Episode #101

Credit Scores Are Dropping By 20+ Points in Some Counties

A report in the Cincinnati Enquirer shows that at least 2 counties have had major average credit score drops over the last few months:

• -27 points in Hamilton County. The county’s average score fell below 700
• -35 points in Butler County

This is the first report I’ve seen on credit score drops since the economy went into its nose dive. The impact is being felt in the middle class.

Butler County is a working class, predominately white population.  The average salary per job is $33,600, about 70% own vs. rent and the average home price is about $165,000.  Butler county matches or exceeds the Ohio State average for most statistics on education and income.

Hamilton County when compared to Butler County has more renters, a higher average salary at $40,000, a larger black population [23% vs. 5%] and a lower median house value at $148,000.

I suspect that poorer counties have had lesser credit score drops as their scores were probably lower to begin with.  I can’t guess what is happening in the wealthier neighborhoods, but I suspect that credit scores might not be seeing the same declines as high card limit consumers cut back their spending to counteract the impact of some limits being lowered.  I’d love to see the data though.

Takeaway.  All the forces are coming together to force lower credit scores.  1] credit limit declines 2] credit issuers closing down credit cards that have been unused for 12 months and 3] a worsening economy making it harder for people to pay on time and keep their balances low.

Update:  Credit Karma reported that scores across the country actually rose in February.  Apparently a polarized pattern has evolved.  Some people are saving more and spending less and saw their credit scores rise.  Others are suffering the impact of the economy and seeing their scores decline.  Increasers saw 14 point increases and decliners saw 14 point declines.

Similar Posts:

• Evidence Credit Scores Are Dropping – Episode #101
• Average Credit Score Characteristics – Episode #62
• Are Credit Scores Becoming Less Predictive? – Episode #73
• Average Credit Scores – Episode #60
• Are Credit Card Limits Being Lowered? Will This Impact My Credit Score? – Episode #42
• Credit Score Chart – Episode #88