Equifax Study Finds 1M Fewer Americans With Subprime Score

There are more than 1 million fewer consumers nationwide whose credit scores are considered subprime as of Sept. 30, 2012 from the same day one year prior, according to a study by Equifax.

The share of consumers who have an Equifax score below 620 is 25.2%, which is 70 basis points lower than it was on Sept. 30, 2011.

“It is nice to see that over 1 million people across the country have moved out of the below 620 range. 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,” said Trey Loughran, president of the personal services division of Equifax.

Right now there are few, if any, mortgage loans being made to consumers with scores 620. And experts feel the new qualified mortgage rule from the Consumer Financial Protection Bureau will continue to be a bar to nonprime mortgage originations.

Of the nation’s 25 largest metro areas, only Houston saw an increase in consumers with bad credit, and that was just 0.6% higher.

On the other hand, Chicago has 9% fewer consumers with subprime credit than it did at the end of the third quarter 2011.

Equifax said geographic differences explain why some areas have more consumers with improved scores than others. Those differences include employment, population shifts and demographic changes. Chicago’s unemployment rate declined 1.5 percentage points, for example.

Other metro areas with significant improvements in the number of residents with scores 620 and above include San Francisco, 6.4%; Sacramento, 6.2%; San Diego; 5.3%; Los Angeles, 5.3%; Las Vegas, 4.3%; Phoenix, 3.7%; and Miami, 3%.