Sep 20, 2011
Effects of the foreclosure crisis on credit scores
20 Sep 2011
Posted by Andrew Kantor
Here’s an odd tidbit: According to FICO’s Banking Analytics blog, there was an interesting pattern to consumer credit scores as the recession took hold and progressed.
At first, when the recession first hit, credit scores tended to get much lower or much higher, while the middle segment — 600 to 749 — shrunk considerably.
Why the move to the “tails” of the credit-score bell curve? FICO speculates that one group of consumers was hit by credit problems (e.g., foreclosure) and saw their scores drop, while others moved to protect themselves by paying off debt and reducing risk, thus raiding their scores.
Starting in 2008, however, the tails began to shrink as consumers began repairing their credit, while others found themselves increasing their risk, possibly as a result of the market.