U.S. Credit is Less of a Risk

The median consumer credit score has risen sharply since last year, according to an announcement from TransUnion today. This is based on the company’s proprietary Risk Index, which is the lowest it has been in five years in the United States. For those unfamiliar with this index, it measures the relative risk of default - the lower the value, the better the credit risk for individuals. The Index has improved from 120 in 2000 to 109 in 2005.

Overall, the average consumer credit score has risen six points – from 676 to 682 – since the first quarter of 2004. This is great news for anyone seeking a Florida home loan. While consumer credit scores have gradually been rising over the last two years, this marks the first substantial increase since the second quarter of 2000.

“Changes in the TransUnion Risk Index are a reflection of a variety of factors that include population shifts, regional and national economic conditions and location-specific trends in lending and credit usage,” said Chet Wiermanski, vice president of Analytics for TransUnion. “And while the TransUnion Risk Index is important, its true value to risk managers comes when it is coupled with our other research capabilities and services.”

Where does the data behind these figures come from? The TransUnion’s Trend Database, which consists of a quarterly snapshot of 25 million anonymous consumers randomly sampled from TransUnion’s national consumer credit database. Each consumer record contains more than 200 credit variables that illustrate consumer credit usage and performance.

As credit ratings around the country rise, approval on mortgages should increase, as well.