Creditors were over lending money to consumers and solely basing their underwriting standards on FICO scores. They need to take responsibility for the credit crisis because they over extended credit based on the FICO scores.
Los Angeles, CA (Vocus) July 22, 2010
Figures recently released by Fico Inc. show nearly 43.4 million Americans have a credit score of 599 or below. This marks them as being a high risk for most lenders.
Many Americans facing a low credit score are unlikely to be able to obtain a credit card, car loan, or mortgage. Lower credit scores; resulting from heavy consumer spending and debt has been attributed to the recent slow economy.
Morgan Drexen, Inc. CEO Walter Ledda says, “Creditors were over lending money to consumers and solely basing their underwriting standards on FICO scores. They need to take responsibility for the credit crisis because they over extended credit based on the FICO scores.”
Morgan Drexen provides proprietary software and automated administrative services to attorneys across the nation. This automated software, creates efficiency so that attorneys can spend more time with their clients who are in financial difficulty and less time doing paperwork.
As consumer credit heads south, Morgan Drexen CEO Ledda adds, “ In the month of June alone the attorneys we support have engaged over one thousand new clients; in June 2009 there were a little over two thousand new clients, so numbers are down this year. These clients are consumers in severe financial difficulty. It is my hope, that consumers are now taking big steps to reduce their debt. I personally think consumers should look at their finances and try to lower their debt.
For most people a FICO score below 600 represents poor credit, but what does that really mean? Carey Howe, of Morgan Drexen says. “ Most people strive for a high FICO score, as this represents credit worthiness. Unfortunately, FICO does not consider the debt versus income ratio. It is based on five key factors. These are payment history, amounts owed, length of credit history, new credit and types of credit cards. There is no consideration for how much a person actually earns. In my opinion the FICO score often is not a true representation of credit worthiness.”
Mary Allison contacted attorneys supported by Morgan Drexen to help her with her debt. Mary’s FICO score was 802 despite the fact that she was in severe financial debt. There are many like Mary who have high FICO scores but still need help managing their rising debt.