Consumers Accepting Low Credit Scores and Mortgage Defaults

Financial difficulties today are something that millions of consumers across the country have dealt with in the last few years, and as a consequence, many are now more understanding when it comes to taking drastic actions.

Today, some 77 million Americans believe it’s socially acceptable to have a low credit rating, accounting for some 36 percent of the country, according to new data from JZ Analytics, compiled as part of a poll for ID Analytics. Further, another 17 percent, or 36 million claim they would exaggerate their personal information as a means of making themselves more creditworthy and therefore be able to obtain new financing.

Why the change?

While consumers were not always this accepting, since the onset of the recession, many of their attitudes toward borrowing and their credit have changed considerably, and millions have moved to become more cautious in the face of increased financial difficulties, the report said. This data shows just how much borrowers’ stance related to these aspects of their finances has been affected by their own missteps, leading to greater understanding.

“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.”

More on walking away from a mortgage

Perhaps because many Americans have gone through similar problems related to having underwater home loans as a result of plummeting property values, millions now say their attitudes toward strategic defaults has changed drastically, the report said. A strategic default involves borrowers who owe more on their mortgages than their home is worth, but who typically cannot qualify for any assistance because of their financial standing, simply walking away from their houses and allowing them to fall into delinquency and, eventually, foreclosure.

In all, some 13 percent of those polled, accounting for 28 million people nationwide if data was extrapolated out, say they would strategically default on their mortgages if they had to, the report said. Another 17 percent, or 36 million consumers, say they know someone who has already done so.

Moreover, 32 percent of those polled, accounting for close to 68 million people across the country, said they believe that homeowners who are underwater, through no fault of their own while remaining current with payments, should be able to strategically default without facing a negative consequence for doing so, the report said. A smaller number felt that homeowners said that consumers should be able to strategically default for another reason, particularly if they felt that their lender extended them their financing knowing that they would not be able to afford payments.

Further findings

Of course, a strategic default, or any other kind of missed payment, can have a massive negative impact on a consumer’s credit rating, but so too can the prospect of identity theft, the report said. Further, this type of fraud is becoming more common, and therefore playing on the minds of more consumers as a result.

In all, 35 percent of respondents, or 75 million people nationwide, say they are now more afraid of being hit with this crime than they were five years ago, the report said.

Identity theft can show up on a borrower’s finances in a number of ways, depending on the personal or financial information to which a thief is able to gain access. For instance, they can quickly drain bank accounts if they have online account login details, or if they are able to find out a debit card and PIN number. Similarly, in instances of credit card fraud, oftentimes all they may need is the card number and three-digit security code on the back to make fraudulent purchases.

In the case of these two crimes, the best way for a consumer to determine whether they’ve been hit by it is to simply checking the monthly documents associated with them. Scanning bank records or credit card statements to determine if there are any unrecognized transactions can be a great way for consumers to fight this type of fraud.

There is another way to detect identity theft, and it involves checking your credit report. By ordering this document and scanning it for any unfair markings that you may not have been aware of, you may identify things that are dragging down your score. If you find any, using a credit repair service may help you to clear up these entries and get back on the right track.

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