One In Seven Creditworthy Americans Can't Pay Bills, Study Shows

[Amerigo Vespucci]

One In Seven Creditworthy Americans Can't Pay Bills, Study Shows

First Posted: 12- 3-10 09:34 AM | Updated: 12- 3-10 09:41 AM

William Alden

http://www.huffingtonpost.com/2010/12/03/paying-bills-_n_791485.html



In the wake of the worst financial crisis since the Great Depression -- and a spike in the unemployment rate in November -- one in seven creditworthy Americans weren't able to pay their bills, a new study shows.

As job losses and pay cuts took their toll, a staggering number of Americans who had never before had serious trouble paying their bills had a "negative credit experience," according to a new survey from Deloitte. These "first-time defaulters" were a full 11 percent of the population, the survey suggests.

One in seven people who had never before seen this kind of credit trouble ended up defaulting, the study showed.

The survey doesn't reflect irresponsible borrowers taking on more debt than they could pay, or even greedy banks offering predatory loans with outrageous interest rates. Instead, the data suggest many creditworthy Americans, most with credit scores above 620, are unable to make basic payments, such as credit card and medical bills.

[rucky]

1. And I'm not one of them.

I'm not "creditworthy", per FICO, and that's partially because I pay my bills (but it's not always easy to manage).

[Warpy]

3. If I unfroze mine, my scores would likely be in the basement

because I've always been allergic to debt.

I live in a shabby fixer in a bad neighborhood and filled it with thrift shop furniture, but it's all mine.

[SmileyRose]

4. Every single post

I have read of yours makes me like you even more.


:loveya:

[Subdivisions]

5. I'll second that =) n/t

[ananda]

2. Ermm... if you can't pay your bills...

... then why would you be considered creditworthy in the first place?

[Little Star]

7. It says this was their first time being unable to pay their bills.

They must have been creditworthy until this first time.

[Mariana]

10. Right. It should read "Formerly Creditworthy". nt.

[laughingliberal]

13. Ermmm. My FICO score was 811 in 2007. Then I lost my job.

We managed to pull some savings & keep bills paid for a while thinking it would be a short term problem. It wasn't.

[rucky]

14. You have to get really behind on utilities before they report you.

So if you have to forego a credit card payment to keep the lights on, you're screwed.

[Ilsa]

6. What an insane system. More debt opportunity is required to

Improve one's "creditworthiness". There is no appreciation in the system for those who minimize or avoid debt and credit lines.

[Frisbee]

8. Well now, that wouldn't make the banksters richer, would it?

And after all, isn't that REALLY what it's all about?

[pipi_k]

9. You know what's insane too...

Mr P and I each have our own credit cards...his history is longer and better than mine, so at least one of his cards has a way higher limit than mine...

We're both real good about paying off our balances. I often pay mine off in total each month except right after Christmas when it might take me a couple of months to pay it totally off.

Anyway, so Mr P gets a letter from his cc company saying he's such a good customer that they're increasing his limit...

which to me means that they don't like being paid off each month (no finance or interest charges for them) so they're upping the ante, so to speak...giving him more credit in the hopes that he'll use it and NOT be able to pay the whole balance each month.

sly devils they are...

[Mariana]

11. They've been doing that forever.

I'm sure they hope that in a moment of insanity you'll rack it up to the max and have to pay them some interest. You know they call people who pay the balance off each month "deadbeats" because they don't pay interest - even though the issuers still make plenty on the transaction fees.

[badtoworse]

12. If you have no credit lines and have not paid off any debt, ...

or used any credit cards, they would have no data on which to rate you. I suppose you could have a rating of "Unrated" or "Unknown", but it would have little value in my opinion. If your intent is to avoid debt, what would you use a credit rating for?

My wife and I are fortunate in that we are able to pay off the complete balances on our cards when they come due. If you have the discipline to get by without cards, it seems to me you'd have the discipline to manage them intelligently. By doing that, you'd build up a good score which is a definite asset.