Fully 35% of a person’s FICO score boils down to one’s history of making
payments on time. The average FICO score today now is down to 690 after the
borrowing spree of the past seven years. Yet to obtain a plain-vanilla 30-year
fixed rate mortgage, the minimum score is 760. For a 15-year HELOC, it is 740.
And, for a three-year auto loan, the minimum FICO is 720. This is a primary
reason why the credit cycle is not about to be revived. It is not that standards are too tough as much as the unprecedented borrowing binge over the past seven years has left the household sector, at the margin, with a credit profile that is too risky for the banking community to justify to their shareholders.
