Credit scores are one large casualty of the “great recession,” as many who had previously been able to honor payments on larger purchases such as cars and homes received hit after hit to their financial situation as businesses tanked and family lives crumbled in the wake of the financial meltdown.
Credit scores have traditionally been seen as an earmark of responsibility, but in recent years, factors such as rising healthcare costs have driven some folks who maintained lifelong decent credit scores into financial distress. Compounding the issue is the high price of poor credit scores- many standard month-to-month costs such as car insurance increase dramatically when your credit score takes a big hit.
And figuring out exactly how credit scores are determined is a mystery- while your credit score can literally cost you thousands of dollars each year, the exact manner in which it is calculated is a trade secret. But while the market for lending remained unworkably tight for many in recent years, reports indicate that the situation is looking up, and borrowers with lower credit scores are finally able to borrow again.
Brian Winters is a general manager at Gerald Jones Honda in Georgia, and he told a local news source that credit has certainly “loosened up” in recent months. Winters says that many people who have been turned down in the past year are finally getting approved for loans:
“We’re seeing a lot of those customers that were having trouble getting approved for credit a year ago suddenly back in the market, and we’re able to get those folks approvals through the lenders.”
Ronnie Sterling, general sales manager at Thomson Chrysler Dodge Jeep, also in Georgia, said:
“If you’re in a position of inequity, banks are working with you to get in newer cars. A lot more people are tending to get into a new car now than they were four years ago.”
As far as credit scores go, auto loans are considered slightly easier for borrowers with damaged credit, and tend to be weighted more by factors such as downpayment and ability to repay the loan.