Live Mic: Credit scores rise during pandemic
SALT LAKE CITY — In the age of Covid, US consumer debt is down and credit scores are up.
Did you use that stimulus check from your Uncle Sam to pay down some bills?
The average FICO credit score now — a measure of consumer-credit risk — is 711, five points higher than it was same time last year. The FICO score has become a fixture of consumer lending in the United States.
In July, just 7.3% of the population was past due on a payment by more than 90 days in the last six months.
Shane Stewart, DMBA (Deseret Mutual Benefit Administrators) certified financial planner, joins Lee Lonsberry to discuss what this mean for credit card companies and your ability to borrow.
Stewart said the FICO score from July may be a lagging indicator, which is is a financial sign that becomes apparent only after a large shift has taken place, such as unemployment rate or corporate profits.
“It takes a while for you not to pay your bills before it affects your FICO score,” he said.
Stewart added that those lucky enough to have kept their jobs during the pandemic are not spending as much and not spending on credit as well.
Stewart recommended that homeowners who have mortgages and whose credit scores have risen lately might want to look at refinancing their homes at this point — what Stewart called a perfect storm of higher credit scores and lower interest rates. He added a good rule of thumb is find a rate at least 1% less than what you now have.
“Are lenders responding as they would normally or is there some kind of new Covid lens through which they are looking at these numbers?” Lee asked.
Stewart said the stimulus money masks the credit score ” a little bit.”
“They’re [lenders] a little bit more leery or looking a little further into things besides just credit scores,” Stewart said.
“How’s Christmas going to look for people?” Lee asked.
“When it comes to this year, I think we’re gonna see a bit of muted spending unless we see another stimulus package, then that might help stimulate the economy. Of course that’s controversy whether that works or not. That would at least stimulate the short-term spending in the economy especially around Christmas time,” Stewart said.
Live Mic with Lee Lonsberry can be heard weekdays from 12:30 p.m. to 3:00 p.m. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app.
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