Nevadans endure drop in credit scores

RENO -- Nevadans' credit scores dipped as the state's economy tanked during the housing industry meltdown, according to a credit reporting bureau.

In 2008, residents' average credit score dropped from 630 in the first quarter to 618 in the fourth quarter, said Steven Katz, director of consumer education for TransUnion.

The decline coincided with rising delinquency rates for auto, credit card and home loans, with the percentage of late mortgage payments particularly high, Katz said.

According to TransUnion, the 60-day mortgage delinquency rate in Nevada rose from 5.81 percent in the first quarter of last year to 9.01 percent by the fourth quarter, the second-highest rate in the nation.

Nevada also had the eighth-highest delinquency rate for auto loans and was No. 1 nationwide for its credit card delinquency rate.

Given the jump in delinquencies, the drop in Nevada's credit score is not surprising, Katz said.

"No. 1, you had people paying late. No. 2, you had people applying for a lot of credit cards to pay their bill," he said.

"And while all that is happening, the balance on all their accounts kept going up and up. All those things will pull your score down."

A credit score represents a consumer's risk as a borrower and plays a major role in determining whether a loan request is approved or denied.

Loans also are priced according to risk, and someone with a lower score typically gets a higher interest rate.

A couple of years ago, a credit score of 680 was enough to get the best interest rate, Katz said.

With the tightening of lending standards after the housing market collapse, lenders now typically require a credit score of 740 to 750 for the best interest rate.

"Your credit score is a very important piece of any consumer's risk profile," said Chad Osorno, Wells Fargo's regional president for Northern Nevada. "So it's extremely important for them to take it seriously."

The method of determining a credit score varies by company but generally is determined by a consumer's payment history, credit utilization, credit history, types of credit and new credit.