U.S. credit scores trending up, but 2008 crisis' effects haven't disappeared

Though far from the only rubric of measurement used to gauge the financial viability of American individuals, the tried and true Fair Isaac Corporation credit score still carries considerable weight in the arenas of finance and business. As such, examining trends in the rise and fall of average credit scores over various periods of time can aid in the assessment of the U.S.'s overall financial well-being - at least as far as credit is concerned.

"Effects of the Great Recession still resonate, despite increases in average credit scores."

Things get a bit tricky if you're looking to determine this information for Americans who haven't made an impression on the credit landscape. Even now, nearly 10 years removed from the 2008 financial crisis and the Great Recession that followed, the effects of those fiscal maelstroms haven't abated entirely. 

A long way back up from the brink
According to FICO's own data, the nadir of American credit came in April 2010, when almost 26 percent of the credit-using American population had scores of 600 or less. Other economic metrics like the unemployment rate, which floated at or just below double digits, were similarly dire. 

In the six years that followed, a significant number of those within that 26 percent figure - 17.5 million Americans - improved their financial standing to reach higher FICO-score brackets. As a result, the share of 600-or-below consumers dropped just under 21 percent by April 2016. Also, the total figure of Americans with "super-prime" scores - between 800 and 850 - had passed 20 percent by that time, for the first time since 2005.

ValuePenguin noted that as of 2017, the average American FICO score was an all-time-high 695.

The underbanked and credit-invisible
None of the figures above account for those who dropped off the radar of conventional banking and credit. Such individuals frequently lost their houses to the banks or incurred other crushing financial setbacks, and had little trust in the system, driving them to eschew credit cards in favor of the bare essential banking services and nothing else. 

Per data from ValuePenguin, about 14 percent of Americans can be considered credit-invisible. Additionally, the FDIC determined in a survey that about 24 million U.S. residents qualify as underbanked. Some fit into both categories.

Accounting for all
Businesses that lend or otherwise extend credit must exercise caution. However, ignoring the underbanked means ignoring a demographic that can benefit such companies' bottom lines. Microbilt's PRBC platform leverages alternative credit data to assess financial status without FICO scores, which can identify financially stable underbanked consumers. Contact us today to learn more.

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