Credit scores increase during pandemic
Credit scores have increased during the pandemic, and CUNA Senior Economist Jordan van Rijn spoke to The Simple Dollar to explain why. The average FICO credit score hit a record high of 711 in July.
The article notes that paying bills accounts for 35% of the overall score, and van Rijn highlights ways credit unions are “working with consumers to avoid delinquencies, such as by offering skip-pays, loan modifications, deferments, forbearances, and other means to allow consumers to avoid negative impacts to their credit scores.”
He cited CUNA research that shows nearly 95% of credit unions are offering loan modifications, which helps avoid both delinquencies and charge-offs, but also frees up cash flow to pay down debt.
But van Rijn says the current spike in credit scores is unlikely to last, though a government stimulus package would prolong things. The longer Americans wait for relief, the more damage their credit scores will take, he said.