Credit card company policies that drastically cut people's available credit over the past two years did their damage to credit scores as expected. Credit Karma, in its trend study, reported today that according to its June Credit Score Climate Report the current average U.S. consumer credit score was 674 in May. That's down almost 20 points since 2007 according to Experian's National Score Index. That index showed that during a six month period between January and June of 2007 the average credit score was 692.

As credit card company actions drive credit scores down, banks continue to make it difficult or much more expensive to get credit with scores below 720. In most cases you must have at least 20% to put down on a home to get a mortgage, unless you work with the FHA if your credit score is below 720. Some banks want even higher scores.

The good news in the Credit Karma report is that consumers are improving their debt habits. The average consumer credit card debt decreased by $134, but that's only a drop in the bucket for many of them. The average credit card debt was $6,938. The average home mortgage loan was $206,427 plus the average home equity loan is $54,370. Auto loans averaged another $14,539 and student loans averaged $27,201.

Most consumers saw their credit scores improve or stabilize. Nationally 38% of consumer credit scores went up and 34% had the same credit score in June as in May. That's a slight improvement from May's rate of 32% who saw the same credit score as April. About 28% faced a decrease in their June credit score.

As credit card companies continue to lower available credit and raise interest rates, I don't expect to see major credit score improvements any time soon. Generally the best scores go to people with a credit utilization of about 10% to 20%, which can be very difficult if your allowable balance has been drastically cut.

I've seen postings on Wallet Pop regularly of people with good credit scores having their $10,000 credit line cut to $5,000 or lower. If one was carrying a $1,000 balance on a card with $10,000 credit availability the credit utilization would be 10%. If that credit card company cuts the available credit line to $2,000 that $1,000 balance gives the person a 50% credit utilization and can dramatically impact their credit score.

Hopefully the credit card company shenanigans are nearing an end and we'll truly be able to see people begin to repair their credit scores. Until that happens we can't possible see a recovery from this recession because without access to credit many people can't buy major items such as a home or car.

Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Improving Your Credit Score.

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