There’s good news for those of you looking for an economic recovery!
We’re finally seeing a little bit of sunlight after years of economic gloom. The economy is recovering again! According to Experian, the economy is showing signs of recovery since the 2008 financial crisis. Housing prices, mortgage applications and foreclosure rates are returning to pre-financial crisis levels. Plus, the unemployment rate has dropped to its lowest levels in nearly a decade.
Not only are people going back to work, but their credit scores are improving as well. We’re seeing less people with credit scores below 600 points! 21.2% in 2017 as opposed to 22.6% in 2016. While credit scores between 781 to 850 points have risen to about 22.3% of the population. Just a year before it was approximately 16%! That’s a huge difference.
Sure, it means that only a fifth of Americans have good credit. But with America’s economy recovering, we’ll see those numbers rise. Consumer confidence has hit a seventeen-year high, and that means more approved loans. Not only that, but more big purchases will come. More houses and cars sold, more production, more jobs, more money, and the cycle goes on.
But for some, the recovery is just beginning
A near-decade of economic uncertainty results in damage to countless people’s financial liquidity. The most heavily hit are in the sunbelt states and in the mid-west. Especially in states such as Mississippi, where the average has dropped to below 650 points. Other states where people are hit hard by credit woes are Idaho, North Carolina, Maine and Alabama. Traditional industries and manufacturing in particular are hit by the recession also.
The resulting drop in average credit scores means the people in those states are having a more difficult time getting approved. For loans, credit, etc. Less houses can be sold, less cars bought. Even less demand for consumer or luxury goods, less jobs to provide those goods. Not to mention less money going into the economy to start the cycle anew.
And it’s not good in the larger economic scope either. Home ownership is down to its lowest levels since the 1960’s, according to TIME. There’s a combination of stagnant wages and a transition from a manufacturing to a service economy. Which means there’s less money to go around.
Sure, that sounds like it’s a dire situation. Perhaps sometimes it feels like you might miss out on taking advantage of a recovering economy. But, you don’t have the credit to secure a loan. Or, you need to handle problems like chronic underemployment or your previous debts racked up. It could affect your ability to get a new home or get utilities. Even retrain yourself for the new economy by applying for a student loan.
Does that mean you should lose hope? Of course not!
More people are looking into mortgages than ever before! Especially among millennial’s. The millennial generation is reaping the benefits of the economic recovery. Even maturing to the point where housing and mortgages are important. You may not know how to freeze your credit and deal with Equifax collections agencies. But it doesn’t mean you can’t kick off your own version of an economic recovery. So you can start taking advantage of a hot economy.
First of all, did you know there are more than one credit score out there? That’s because there’s more than one credit reporting agency. Plus, different companies may report to different credit agencies. From your utility bills to your landlord, your cable and your smartphone, your service providers. All may report to one or all of these agencies, and that in turn gives you different credit scores. Equifax, TransUnion and Experian all keep your credit report and, for a fee, can give you access to your credit score.
These credit scores can also affect your relationships, where you live, where you work, even if you can secure a loan. Or get something as basic as TV and internet. Service providers and sellers don’t just want a customer; they want a customer they can depend on to pay their bills on time. And what do they use to ensure whether a new customer will pay on time? A credit report! Because the consumer credit report has the metrics they need to find out if their future customer is going to pay their bills on time. They see whether or not they pay on time with other creditors in the past.
You can’t blame a company for watching out for their interests any more than a company can blame a person for bad circumstances leading to poor credit. Such as personal emergencies, or (dare I say it) economic factors outside your control, such as a decade-long recession.
But what you can do is kick off a bad credit score recovery of your own
First, start with getting your credit report from each of the agencies. From there, you can tell what credit reporting agency has in terms of credit score for you. It will also give you an idea which credit reporting agency your creditors also report to. Not only that, you can also find out if there’s any outstanding debts or past collections. If they are still being reported on your credit report, you’ll need to handle those with some credit repair.
Once you figure out what you owe to who, then you can take care of it!
One of the best suggestions for beating back the debt monster is not to tackle the hardest one first, but the easiest. Try the snowball method of eliminating your debts. Make minimum payments to the debts you already have except for your smallest debt, which you then pay off as much of it as you possibly can each month. When the smaller debt disappears, you then move onto the next one.
Not only do you save on interest by eliminating the small debt, but with less debts nibbling away at your money, you’ll have more cash to deal with them. Also, by tackling the small debts first, you can get the quickest boost to your credit score in the shortest amount of time. Not only that, you have the added psychological bonus seeing some early progress, and success begets success.
Whatever you do, you do not want to be late on your payments ever again, or those late payments get reported to your credit bureau and lower your credit score.
Once your debts are under control and show a consistent pattern of on-time payments to your creditors, you’ll be on your way to your own economic recovery. Then you can consider applying for a student loan to make yourself more employable, a mortgage for a house for you and your family, a car, furniture, all the essentials that not only make your life better but keep our economy rolling.