MINNEAPOLIS — Americans' credit scores, the three-digit number that determines whether you'll get a loan and how much you'll pay for it, have taken a beating.
Millions of consumers' scores have dropped, making it more expensive to borrow money — or even impossible if the score has sunk low enough.
"You have to watch out for a vicious circle. Now you have a bad credit history, which makes it harder for you to recover," said Evan Hendricks, a Washington-based expert and author on credit reports and scores.
The falling credit scores are a reflection of the times: plummeting home values, record foreclosures and the overall recession. At the same time, lenders are applying stricter standards to borrowers, including requiring higher credit scores.
"For better or worse, our economy is very dependent on consumer spending," Hendricks said. "If tougher standards mean that people with good credit can't get credit ... that could choke off the recovery or slow it down."
Most Americans might not know their credit score, but they've seen enough marketing by the credit-score companies, including Minneapolis-based Fair Isaac Corp., to know that the number, which can range from 300 to a perfect 850, has become a de facto national ID. Lenders rely on Fair Isaac's FICO score, but so do employers when screening job candidates, insurers when issuing policies for homes and autos, and landlords when renting an apartment.
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