More Than 25% of Adults Have Abysmal Credit Scores

As if there wasn't enough bad news this last week, with suicide hotline calls skyrocketing and even the wealthy intentionally letting their homes slip into foreclosure, CNBC reports that Americans' credit scores have sunken to a new low.

While it may be fair to say that many people don't even know their credit score, it impacts every major financial decision you make. And now, 25.5 percent of consumers, almost 43.4 million people, have a credit score below 599. Historically, only about 15 percent of consumers with active credit had a score below 599 in the FICO range of 350-800. Generally speaking, a score of 700 or higher is what you're aiming for. That tends to reflect a mix of healthy spending and saving habits, though these things are always subject to some debate.

What does all of this mean, though? Why should we care if our collective FICO scores are down for awhile? Well, for one, more consumers will be considered "high risk" in the eyes of lenders and will be less likely to be given credit cards, auto loans and mortgages. That in turn means people will pay higher interest rates for basic financial services. It also means that more restricted access to credit will continue the slow pace of economic recovery — a sizable factor contributing to its sluggish state right now. When people are barely scraping by, they need varied financial assistance options to kickstart their own economy recovery, just like the larger economy needs a boost sometimes. When people can't apply for new lines of credit or secure a reasonable rate on a mortgage or car loan, spending stagnates. When spending stagnates, the entire economy suffers. And thus, nothing changes.

The only good news? The number of people with scores of 800 and above has actually increased in recent years. This signals that quite a few people paid down debt and quit overspending before the recession got really bad, but unfortunately, as many of us know, it's a lot easier to ruin your credit score than to give it a boost. And as always, it seems that this one measly little number has more influence over your financial future than even a few good decisions combined.

Photo credit: The Consumerist