In Friday’s Wall Street Journal online, a lead story indicates sub-prime lending is on the rise. The article states:
Almost four of every 10 loans for autos, credit cards and personal borrowing in the U.S. went to sub-prime customers during the first 11 months of 2014, according to data compiled for The Wall Street Journal by credit-reporting firm Equifax.
The dollars are significant. We’re talking about over 50 million consumer loans and cards totaling over $189 billion – the highest level since 2007. Sub-prime is defined as borrows with less than a 640 credit score.
What does this tell you? I see two major points. First – you don’t need a high credit score to get credit. This means there is no reason to fear a drop in your credit score when you pursue a smart campaign to shed your credit card debt and property that remains underwater. Our clients that have settled their credit card debt through debt resolution have seen their credit scores increase back to 750 in as little as a year and half following the settlements.
The second point is the Lending Industry did not learn from the Financial Crisis and they are going to lead us down the same pathetic road we crossed from 2008 – 2012. Hopefully we, as consumers, did learn. The lesson is you need cash in the bank – savings as a cushion when the economy falters. The available credit will be taken away and you don’t want to be caught holding the bag… again. Remember Eve of Destruction - the song by Barry McGuire, “You tell me over and over and over again my friend, ah you don’t believe we’re on the eve of destruction.”
Perhaps I’m just too cold from the weather – then again, perhaps I’m hot on the spot.
Be sure to listen in on Saturdays from 8:30 to 10 AM on WDFN 1130 AM – on iHeart by CLICKING HERE– and watch the show on TV 20 on Sundays at 11 AM. Law and Reality is not just information – it’s entertainment!
Have a great week – stay warm – and don’t forget our Free Seminar – tomorrow evening.