With all of the turmoil in the subprime mortgage sector this summer, the importance of knowing exactly what is a good credit score has gotten a lot of attention from the public. For those unfamiliar, subprime loans are named as such because they were given to borrowers with less-than-perfect credit scores, as determined by credit bureaus.
Despite the fact that most subprime mortgage loans were only offered by lenders to those who would be able repay them, the previously inconsequential subprime sector of the $10-trillion U.S. mortgage market was able to significantly disrupt the global credit markets, causing a quite dramatic 10% downturn in the domestic stock market with real, substantial losses and repercussions.
The funds availability for people with poor financial history got dried up with the advent of closure of business by subprime lenders and lay off of employees. Persons who had recently applied for a loan to buy a house, car or other large item in the next couple of months should quickly check their online credit score to ensure that they are still qualified. Many people have lost their eligibility for obtaining loan within a matter of days and were terribly disappointed.
In light of the subprime loan debacle, people are starting to realize the importance of their financial histories. With a good financial report being more necessary for a loan, credit bureaus are being flooded with not only request for copies, but also help on how to improve less than perfect reports. Therefore, credit bureaus are making the reports more accessible.
Most loans, however, were only offered to those who could afford to pay them back, so it is troubling how the obscure subprime section of the $10-trillion U.S. mortgage market could have caused such worldwide havoc in the credit markets. But, it did, and along with a very sharp 10% correction in the domestic stock market, the pain this development caused was real and so were the losses.
Even though the current loan difficulties are making it hard for people to receive money for mortgages and other big loans, many experts believe the Federal Reserve will make cuts to its interest rates, making it easier for lenders and loan applicants to move the money necessary to keep the market afloat. This will make receiving and paying off loans possible again, and prevent a total bust on the economy.