Posted on February - 25 - 2010
FICO: Some consumers opting to pay credit cards over mortgage
A recent report from FICO shows that people with higher credit scores may be more likely to pay off their credit card debt rather than their mortgage loans.
According to the firm, 0.3 percent of people with credit scores ranging from 760 to 789 defaulted on their mortgage loans in 2009. That compares to the 0.1 percent with that same mark range who did so with their credit card accounts.
“Economic instability is creating unknown risk in lenders’ credit portfolios as well as counter-intuitive trends in consumer behavior,” said Dr. Mark Greene, CEO of FICO.
Recent reports have indicated that one thinking principle why consumers may be willing to go into default on their mortgages is because their properties are “underwater.” That means that the amount they owe upon the body the mortgage exceeds the actual character of the property, making paying off the loan a less-desirable option.
However, any type of default or foreclosure can hurt a one’s make no doubt of score for years, which is especially in such a manner if they started out higher on the FICO dish.
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