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Debt Rising While Lenders Limiting Credit

Tiffany Dow

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With our nation's current economic status, you can be sure that getting a personal or home loan is going to require excellent credit from now on. It will become increasingly difficult for consumers to get any kind of credit as overall debt is on the rise with no end in sight.

What is more is that all industry is being affected. Car sales are down simply because 6 out of every 10 cars are financed through a bank loan. This goes for most markets because folks are just cutting back or do not qualify for financing.

The burst housing bubble is going to ripple for years to come affecting everything from getting a home loan to consolidating credit debt. As such, we can say good-bye to the easy credit of recent years.

Gone are the days of 0% down; 5 year ARM; 30 year loans. We are all going to suffer from some bad economic decisions for a while and that means it will be tougher to qualify for any kind of loan. Even getting a credit card will be like a job interview for a single position with 1000 applicants!

What can you do? Well, there are a few options still open albeit far more restricted. Options include secured credit cards and secured home loans.

A secured credit card is one that requires the holder to keep on deposit a certain amount of money, say $1000. This is your spending limit, although you may add to it as you can and eventually the credit institution may increase your credit limit as you show your ability to pay the monthly payments.

This will be the most common option in the future for young people wanting to establish their credit as well as those whose credit is considered a bad risk.

The secured home loan option is no different than the way it was for many of us 10 or more years ago. Prospective mortgagees would have to establish a host of proof that they were a good risk. Typical requirements include a credit score that must be good or better, personal liquid holdings like cash savings and short term investments like CDs, proof of income like tax records, - anything that will establish you as able to pay.

As you can see, it will be next to impossible for most individuals to apply for and get credit anywhere for some time to come. Perhaps it might helps us to remember that this was the way it was for so many years until the lending institutions decided to get lax with their policies so that more consumers could have access to the convenience of credit. Visit for more information!


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