Credit scores increasing across the nation
Consumers escaping subprime label
The number of consumers with credit scores in the subprime category dropped year-over-year, with improvement seen in many metropolitan areas, Equifax revealed in a recent report.
According to Equifax, the total number of consumers with subprime credit scores (credit scores of 619 or less) dropped by approximately 1 million from the third quarter (Q3) of 2011 to Q3 of 2012.
From Q3 2011 to Q3 2012, the total number of subprime consumers dropped 2.1 percent. Subprime consumers now take up 25.2 percent of the overall share, down from 25.9 percent a year earlier.
“It is nice to see that over 1 million people across the country have moved out of the below 620 range,” Trey , president of the Personal Solutions division at Equifax, said in a statement. “We are seeing a trend of consumers being careful and disciplined about their use of existing credit while also being cautious about using new accounts they have opened.”
Metropolitan areas see improvement
Ninety-six percent of metropolitan areas saw decreases in the number of subprime consumers from Q3 2011 to Q3 2012, Equifax said.
Chicago residents made the most improvement escaping out of subprime territory. Collectively, residents of that city improved 9 percent on a yearly basis.
Some of this improvement in credit scores in Chicago could be due in part to a variety of factors. For example, unemployment dropped 1.5 percentage points in Chicago in that same time frame, which represents the fifth best gain in employment amongst the top 25 metropolitan areas.
“Consumer credit scores are improving in most major metropolitan areas,” Loughran said. “The job market is improving and time is starting to heal the wounds of the Great Recession.”
See also: Don’t pay for your credit report