Tipsheet: Credit scores

More and more Americans have such low credit scores that they can't qualify to borrow money for big-ticket purchases like cars or major appliances. What's the impact of that situation in your community?

According to a report from a leading provider of credit scores, FICO, a quarter of all Americans now have scores below 600, making them a bad risk for loans. That means more than 43 million consumers may not be able to get credit at all. Before the recession, just 15% of Americans has scores that low.

John Ulzheimer, president of consumer education at Credit.com, tells CNBC that he's never seen credit scores shift this dramatically before and it comes at a time when lenders are already skittish about taking on more risk. "It's hard to see the good news in this report, unless you are speaking for the payday lenders, title lenders, and pawn stores," Ulzheimer said.

You might check with those types of lenders in your community to see if their business continues to be strong. Also take a look at local car dealerships to see how many sales aren't going through because would-be buyers can't pass the credit check or can't qualify for those attractive "zero percent" offers. According to Auto Loan Daily, it takes a score of 700 to get one of those.

Even if you've reported on credit scores before, it's worth reminding your audience how the scores are calculated, why they should or shouldn't worry about the numbers, and what they can do to repair bad credit. Linda Stern of CBS MarketWatch says most people may not know their FICO number but it's not hard to know where you stand.

If you’re behind on your bills, using one credit card to pay another, and maxed out on all your available loans, you probably have a lousy credit score. On the other hand, if you have a clean record of paying bills and have plenty of unused credit available on your credit cards and home equity line, your credit score is probably good.

Stern says consumers who aren't planning any major borrowing within the next year shouldn't be concerned about their scores. If they are, they should get a free annual credit report to make sure it's error-free and then try to repair their credit. Hubert Rivera, vice president of Consumer Outreach at In Charge Debt Solutions tells Fox Business that 80% of credit reports have at least one or more errors, and in 25% of the cases, the errors result in denial of credit.

One final challenge from Washington Post critic Tom Shales: Consider taking a look at how credit card and "debt relief" companies continue to market their products through the mail and over the air. 

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