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Many think a bad credit score is OK

A new survey also says 32% of Americans think homeowners should be able to strategically default on their mortgages without facing consequences.

By MSN Money Partner Oct 12, 2012 3:10PM

This post comes from partner site Credit.com.

 

Credit.com logoAfter years of economic turmoil faced by millions of Americans, a large number of consumers now have new attitudes toward the kinds of financial missteps that can land borrowers in credit trouble, including strategic defaults.

 

Image: Home Foreclosure (© Dana Hoff/Getty Images/Getty Images)A sizable amount of Americans now consider it socially acceptable to have a low credit score or to strategically default on their outstanding mortgage balances, according to new data compiled by JZ Analytics as part of a poll for ID Analytics. In all, 36% of those polled said they believe it's acceptable to have a poor credit score these days, accounting for 77 million people across the country if the data is extrapolated out.

 

More interesting, however, is that many consumers have seen their attitudes toward intentionally falling behind on underwater mortgages change drastically in the past few years, the report said. A total of 32% of those polled -- 68 million people nationwide -- say homeowners should be able to strategically default on their mortgages without facing any consequences whatsoever for doing so.

 

Further, 13%, or 28 million Americans, say they would likely strategically default, the report said. Another 17% say they know people who have already done so.

"Our research into the consumer opinion of the economic crisis of 2008 found alarming results," said John Zogby, a senior analyst at JZ Analytics and creator of the Zogby Poll. "What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure. If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery."

 

Another area in which consumers have more relaxed attitudes toward certain aspects of their credit rating is whether they would exaggerate their standing to obtain new lines of credit, the report said. In all, 17% of those polled said they would do so, making up some 36 million Americans.

 

Finally, another 35% of respondents said they are now more afraid of being victimized by identity theft than they were five years ago, the report said.

 

Identity theft and account mismanagement can lead to serious damage to a borrower's credit scores, and therefore all financial documents, including credit reports, should be monitored closely as often as possible.


More on Credit.com and MSN Money:

36Comments
Oct 12, 2012 9:48PM
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The credit rating agencies in America are full of "dark stinky matter."  Last I checked, I had a FICO score of 823.  Let me see...I paid off my 30 year mortgage in 10 years (that saved me a lot of money).  I've paid all my debt on time for the last 30 years.  I've paid all my credit card debt monthly in full for the past 20 years getting on average approx $75 a year cash back from Discover card.  I've never been late on telephone, TV, insurance, or any other kind of debt.  However, every year, my auto insurance company is "required by law to tell me that I did not receive the lowest available rate impacted, at least in part, by information on a consumer report."  They don't even tell you what report.  This BS has been going on for years.  My score can't get much higher.  I doubt it can be perfect.  In my opinion, based on my experience,  the credit rating services in this country are fraudulently representing our personal information to make a buck!  Improving your credit score ain't going to make a difference! 


Oct 12, 2012 11:36PM
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We learned from the banks how to treat our homes as a business.  First they caused the financial collapse by gambling with our money.  Then when we didn't have enough money anymore the banks got bailed out with our money.  When our houses were devalued and we still didn't have any money because the banks took it, they started foreclosing.  It was strictly business decisions all the way for the banks.  If someone chooses to strategically default, hey, its just a business decision.  What goes around comes around.
Oct 12, 2012 9:57PM
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I just depends on how you want to live. If you want to be debt-free, you don't need a good score. If you want to live artificially high on the hog, then you will need a good score to rack up some sizable debt. In which case you are a slave to the banks and lenders. Your choice. Listen to Dave Ramsey if you want the former lifestyle.
Oct 12, 2012 6:51PM
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It doesn't matter what kind of credit risk you are.  Be it a loan from a bank, or an insurance policy, the credit rating agencies will sell product that your insurance provider or bank will use to justify raising your rates.  For example, last year, my auto insurance agency used the reason "too many revolving charge accounts" to justify not giving me the lowest available rate.  How many is too many?  I don't know but for the last several years I have only had two revolving charge accounts.  Of course, they don't tell you from which agency they got that information but offer you the opportunity to dispute it if you are willing to get credit reports from all the agencies.  If you already got your one free report that year, too bad, you have to get the latest and guess what?  Well that cost you.  This time around, they are telling me I have "no auto accounts reported in the last 5 hears."  I don't even know what that means but wonder why it wasn't used as an excuse last time around.  Let me tell you why.  The credit rating agencies just make these statistics up each year so they have something new they can sell to clients that then use them as an excuse to justify overcharging you, making you think it's your own fault for your bad rate based on your credit score.   I haven't opened or closed any accounts for several years but they also like to keep using that excuse.  A new one I'm seeing is "Number of open accounts reported paid as agreed."  Let me get this straight, they now ding you if you pay your bills as agreed?  How else would you pay them?  Nothing I read in articles like this are accurate, trustworthy, or even meaningful.  Promoting the idea that you will somehow get a better deal if you improve your credit score is just an empty promise.  The last time I checked my credit scorer, it was 823. It doesn't get much better than that but it doesn't seem to matter, the credit rating industry continued to provide the insurance agency new reasons why I don't qualify for the best rates.  Just bs!
Oct 12, 2012 11:34PM
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Credit reporting agencies are a tool to the businesses that support them.  They are not your friends. Their information is imperfect and not assembled for your benefit.  Their conclusions are, particularly in our present economic situation, not accurate or trustworthy.  People need to concentrate on lowering and eliminating their debts, and always trade debt elimination for credit scores.   When you find it necessary to sue a business for improperly reporting credit information, always sue the credit reporting agencies too. And, always demand that they actually show up for required hearings and trials.  Without this demand for accurate and relevant information, there is every incentive for a reporting agency to report verbatim for the businesses, with no incentive to maintain accurate and relevant records.  Credit reporting agencies exist as a tool to force compliance through coercion with business interests, and not to necessarily report your accurate ability or intent to pay for credit.
Oct 12, 2012 5:04PM
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society used to assume that a person with a bad credit score was a bad person in general. This economy has taken away jobs and security from millions of americans. When people are struggling to even put food on the table, and a thousand other worries that keep them awake at night...their credit score is prob the last thing on their minds.  Especially when they know it could take years to fix the damage done by a lost job. I think since economy is to blame for a large portion of the credit prob then ordinary people shouldnt be suffering all the consequences...
Oct 12, 2012 6:47PM
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We are the only country that uses credit score for everything and to use credit scores for auto insurance is absurd. The reasoning is that someone wirth bad credit files more claims and has more accidents..BS! I know many that have low scores and never file claims that were not warranted or had an accident. We are such a mislead society as most are just lambs to slaughter as we let big government and big insurance ruin our lives. It was not intended for the masses to have to go into default on their homes loans and to point blame to those with bad scores and say the economy will never grow, you needs and education in economics. Real paper money  and Gold makes or breaks the economy not scores.

And for those out there with perfect scores ,when you die the only thing you will have is sadness. You are judged on what you did in this life and how you contributed, not sitting around and wondering how your pissy credit score is..

Oct 15, 2012 9:43AM
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I think the people are fed up with banks.  We bailed the banks out and instead of giving out help the banks kept the money.  Alot of homeowners signed a sub-prime contract without reading the small print, yes, but they believed their agents and are now paying double the amount of their original mortgage.  They walked away and, honestly, I can't blame them.
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Why should we behave any differently than: lawyers, police, wall st. bankers, mortgage companies, lenders of all kinds, business people, brokers of all types, politicians, clergy of all denominations, colleges, pop stars, actors...

 

Getting the picture? We have all been offered a new, low set of standards; all part of the race-to-the-bottom.

 

Enjoy!

Oct 12, 2012 6:21PM
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Sometimes I wonder why I should continue to improve my credit score at all.  I will be finishing school soon and am saddled with a mountain of debt and cannot hope to even refinance my care, let along buy a house.  Discouraging, down-heartening and aptithetical are words that people whose credit is tanked are feeling, but after the bottom falls out, many just do not care anymore.  Why struggle for years and years and then have one little thing ruin your score.  Credit bureaus need to wake up, or the average American is going to able to afford nothing or get credit and then business will also tank.  Banks adding interest, compounding it over and over, and harassing students not even out of school yet are feeling the brunt of their poor treatment of students.  Something really needs to change and it is not Republicans cutting everything. 
Oct 15, 2012 2:53PM
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What does your credit score matter anyway if you pay cash for everything?

 

Oct 15, 2012 12:27PM
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You can get to a point where defaulting and foreclosure is the only reasonable alternative.  We had to move for employment, and our house has been for sale for a year now.  We listed it at a reasonable price, and have reduced the price over $60,000 in the past year.  Nice house, nice neighborhood, lots of amenities, and cannot sell it.  At what point do you say, "This crisis is not my fault, it's big banking's fault", and walk away? 
Oct 15, 2012 2:47PM
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If the banks would work with people who didn't want to default on their mortgages in a reasonable manner we would have a different attitude.

There were/are no common sense options available to homeowners. The smart money learned pretty quick strategic default was best option. I can think of multiple scenerios that would have kept people in their homes and the banks satisfied;

1. Allow homeowners to repurchase homes at current value

2. Reduce mortgage to current value but when sold bank is eligible to receive price gain

3. Credit previous interest payments to principle balance

4. No cost refi to lowest interest rates available

 

Oct 15, 2012 3:57PM
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Credit is for the younger generation. I'm almost 60 yr.s old. What the he-- do I need credit for?
Oct 16, 2012 9:39AM
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What people don't understand is that credit scores are being used for more than just obtaining loans.  Insurance companies are basing their rates on how good of credit score you have, and prospective employers are even looking at credit scores now.  It seems that if you have a high credit score, you must have your ducks in a row. Our mortgage is almost gone, and we have no car loans. However, I will always have credit cards, and I will ALWAYS pay them off in full when they are due as to avoid interest.  This should help keep my credit score high. (And I will continue to collect my cash rewards as an added bonus!) 
Oct 15, 2012 2:28PM
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I understand the feeling.    Because of the poor lending practices forced on the banks by the Clinton administration, people are paying mortgates at values their homes will never again see.    I can hardly blame people for thinking that they are throwing away their money.  It's one thing if it was their own fault, and they had let their home decay to the point of no value, or some such thing.    But the reality is with the state of the economy, people have to make tough decisions about who gets paid and who doesn't, and I'm sorry, but the banks are more at fault than most homeowners for the status of these upside down mortgages.
Oct 12, 2012 4:35PM
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Just the continuing downward spiral away from personal responsibility. 
Oct 29, 2012 5:05PM
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Just because someone uses a credit card doesn't mean that they are not paying off their balance, there are people that actually do that and it makes your score high. Yes, cash is the best but you better have a lot of it to pay for everything in cash.

Oct 14, 2012 1:19PM
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It sounds like Romney was right when he talked about americans feeling like they are intitled to get everything for free.  You are intitled to nothing more than servival. If you want more than that, get off the couch and quit selling your food stamps to support yourself and get a job. If you cant do that then let Darwinism reign.

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