American consumers are in trouble, according to a new study by BadCreditOffers.com. More than 110 million borrowers in the United States with delinquent accounts are now affected by a negative credit history after taking on more debt than they could handle and falling behind on mortgages, car loans, and credit card payments (“Bad Credit on the Rise: 110 Million Americans Now Affected, According to BadCreditOffers.com Study,” Business Wire, Dec. 4, 2008).

TJ Smith of BadCreditOffers.com says the study highlights a disturbing trend that has surfaced in the last few years, “Since 2000 the median U.S. income has remained flat while the cost of virtually everything has skyrocketed, leaving the average American with less money to pay debts.” As a result, he says, consumers have fallen behind on their payments, and their credit ratings are starting to suffer.

Many experts believe the current credit crisis was brought on largely by individuals with poor credit who took advantage of readily available subprime mortgage loans that, now, they can’t repay.

As delinquencies skyrocket on all types of loans and lines of credit, some analysts expect that the state of Americans’ personal finances could only get worse; consumers with declining or already poor credit may not get approved for new lines of credit and could experience interest rate hikes on existing loans.

“Unfortunately this trend toward bad credit will likely continue in the near-term, as people struggle to make payments on their homes, their cars, and their credit cards,” Smith said. “In fact, we expect a spike in credit card defaults in 2009 similar to what we’ve seen in the mortgage market in the last 24 months, leading to further deterioration of credit ratings for many Americans.”

Popularity: 8% [?]

No related posts.