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20/08/2009 -
Despite the fact that the credit crunch has forced many banks to cut credit limits, it has not had a significant impact on consumer credit scores, said research from FICO.The study found that available revolving credit had been reduced for approximately 33 million U.S. card holders between October 2008 and April 2009 - an increase of 8 million from the 25 million holders who saw slashed limits between April 2008 and October 2008.
The survey found the average credit limit reduction to be $5,100 - more than double the reduction seen six months earlier.
Yet for those who had credit card limits reduced, only one third - or approximately 8.5 million consumers - saw their credit scores drop. When credit scores were impacted, the average decrease was under 20 points, FICO reported.
Of the remaining 15.5 million credit card holders, approximately 3.5 million had no change in their score, while credit scores actually increased for the other 12 million consumers.
Though the study focused on U.S. credit card behavior, there is nothing in the study to indicate that the results would be unique to American consumers only.
High credit scores are a win-win for both consumers and businesses, as consumers are more likely to be confident with their spending. It is therefore important for merchants and stores to have credit card processing capabilities, to leverage this positive trend.
