Dark Clouds Looming Over Student Loan Industry

January 30, 2013 By 2 Comments
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My earlier blog post quantified some of the trends we have been seeing in the US student loan industry, namely the precipitous increase in student loan debt.   Our ongoing analysis has found another disturbing trend: recent vintages of student loans have noticeably lower FICO® Scores than earlier vintages.   This chart illustrates the score distribution trend for consumers who have recently opened a new student loan.     Here we see a clear shift toward lower scores. In fact, the median score has dropped 17 points from 659 to 641.     These findings indicate that in recent years, student loan lenders have made student loans available to more consumers with lower credit quality. Since private student loan lenders were … [Read more...]

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Debt Concerns Shape Holiday Spending Plans

December 3, 2012 By 2 Comments
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According to a study conducted by myFICO, credit card debt continues to be consumers’ biggest financial worry as the new year approaches. Nearly one third of respondents are cutting back on holiday spending and plan to practice conservative credit behaviors this year. Only 20 percent will consider opening new credit card accounts, and approximately 65 percent expect to charge less than $500 on their credit cards – a figure that most consider moderate and within their budget.   … [Read more...]

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Student Loan Debt and FICO Score Trends

September 26, 2012 By 2 Comments

  As students incur more student loan debt, lenders and investors in student loans are asking how this is affecting US consumers’ FICO Scores. New FICO research provides interesting insights.   With education costs rapidly outpacing inflation, more consumers are taking out student loans to pay for their education. Looking at a large data sample from a credit reporting agency, we found that 6.2% of US consumers had two or more open student loans on their credit report in 2005. By 2012, that number grew to roughly 11.8%.   Consumers also have a greater amount of student loan debt today. In 2005, consumers with an open student loan on file had an average student loan debt of $17,236. In 2012, that number increased 54% to $26,549. This has outpaced growth for … [Read more...]

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FICO Scores Reveal Slow Economic Recovery

September 19, 2012 By 1 Comment
FICO Scores Reflect Slow Economic Recovery

Our FICO Labs team has taken a fresh look at national distribution of FICO Scores. With a couple of interesting exceptions, we found that consumer scores are continuing their slow return to a pre-recession pattern.       The first two years of the recession (2008-2009) moved the scores for millions of people into the lowest (300-499) and the highest (800-850) segments of the FICO Score range. Correspondingly fewer people had scores in the middle range (600-749). In an earlier post, I explained why these separate shifts happened.   This flattening of the distribution curve peaked in 2009-2010 and has since slowly been reversing. However, the latest numbers suggest two unusual patterns in this recovery. First, the quantity of people with very low … [Read more...]

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