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Monday October 19, 2020

It’s no secret that COVID has pummeled the economy, but Americans’ rising credit scores tell a different story. The story the credit score tells is one of resilience and unprecedented federal assistance. Financially, America is handling this disaster far better than the Great Recession.

In July 2020, the average FICO score sat at 711; the average was 708 in April 2020, and
706 in July 2019. Not only are these averages expected to hold through October, but this level
represents the highest average credit score since FICO began recording this statistic in 2005.

In October 2009, months after the Great Recession officially ended, FICO scores
averaged 668. An individual can have a FICO score ranging from 300 to 850, and the score is
calculated by measuring information from consumer credit reports, which contains debt-to-limit
ratios, payment history, and prior loan applications. The FICO score does not consider
employment history or income.

During this crisis, it appears that people have reduced their credit card spending.
Reducing their debt-to-spending ratio, in addition to stimulus from the government and
deferment programs, have allowed consumers to attack nearly all the factors considered in
calculating their credit score. In June 2020, the Federal Reserve Bank of New York surveyed
roughly 1,300 people, and found that, on average, people who received stimulus payments
utilized a third of that money to pay their debts down. As a result, we are seeing soaring credit
scores, which bodes well for many American’s financial futures.

While it is easy to focus on the negative, it is important to remember that there is always
some positive to be found in a bad situation. Despite an uncertain economy for many Americans, our patented resilience has allowed us to improve our creditworthiness in the face of an almost daily collision with calamity.

At the Chernov Team we understand that knowledge is power, and knowledge of how
Americans’ credit scores are performing is powerful knowledge indeed. At the Chernov Team
we know that whoever comes to the table most prepared leaves with the most, and the Chernov
Team always leaves the table with the most.


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