Consumer credit scores stay the course
Joan Gunin -- Furniture Today, June 27, 2013
The national average FICO score stands at 689, which is unchanged from the same time a year prior; however, this year's FICO score is two points higher than it was just two years ago. FICO scores, a type of credit score that lenders use to assess an applicant's credit risk and whether to extend a loan, is nearly back to the pre-recession score of 690.
Credit scores are lowest in the South, at 674 and highest in the Northeast, at 705. Consumers in the Miami, Fla. metro have the lowest FICO score, of the major metropolitan areas, at 655; while Boston, Minneapolis-St. Paul and Nassau-Suffolk, N.Y. are tied for the highest score at 717.
Consumers are working on lowering debt and improving their credit scores, which is contributing to a higher consumer confidence index; which reached a five-year high in May, at 76.2. "Consumers' assessment of current business and labor market conditions was more positive and they were considerably more upbeat about future economic and job prospects," says Lynn Franco, Director of Economic Indicators at The Conference Board.
% change from
Source: Fair Isaac Corp.
Franco says that recent monthly gains indicate consumer confidence is improving after losing ground due to the fiscal cliff, payroll tax increase and sequestration.
Consumers are not the only ones feeling optimistic. A recent survey of bank risk professionals found that nearly three quarters expect approval criteria on loan products in the next six months to stay the same or become less stringent.
There are also a higher percentage of risk professionals expecting a decrease in the amount of loan delinquencies, further suggesting that consumers are taking control of their debt loads.
Furniture retailers can benefit as consumers manage their credit; 57% of risk professionals expect shoppers to be comfortable carrying a higher average balance on their credit cards.
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