What to Look for in 2009 for Credit
As we start 2009, I, like other identity theft and credit experts, once again dust off my crystal ball to see what’s in store for us for the year to come. Here’s what I see regarding credit in 2009:
- Scarce but available credit. That’s right, my crystal ball tells me that 2009 will be a tough year, but you don’t have to be an expert to figure that out. Many of us either experienced, or know someone who’s had some experience related to, the tightening of credit in the last few months. When the credit crisis was in full swing, I spoke to the owner of a car dealership who told me that he was probably going to have to lay off half of his staff. Not only did sales drop because people didn’t want to make such a big purchase, but even those who wanted to couldn’t get a loan approved. In September, October and November, his sales were 40% of what they should have been. The good news is that the credit crisis has started to lighten up, and it’s expected that things will get better in the second half of 2009. Credit will still be tighter than what we’re used to seeing, but it will be available to those with excellent and good credit. For those who have marginal credit, the situation will be more bleak, but they too will find a few options — just not nearly as many as they had prior to the credit crisis.
- Increased interest rates. Credit companies, particularly credit card companies, are hiking rates at any opportunity. Though you might think that they wouldn’t want to make it more difficult for people to make their payments, it seems as though the losses that credit card companies are taking is driving them to hike rates wherever possible. Expect more of this in 2009. If you miss a payment, that great rate you had will be gone; if you go over the limit, same thing. And if you haven’t had a rate hike in quite a while, well, expect it. In 2009, chances are you’ll see your rate increase.
- Traditional lending practices return — it’s not a circus anymore. Remember those crazy real estate loans that your friends were getting — nothing down, interest-only payments, etc.? Well, those days are gone, and I have to be honest, I’m happy about it. The circus is over, and it’s time to return to a more traditional and reasonable approach. For those who had some difficulty in making reasonable decisions when it came to selecting acceptable loan terms and ended up buying more house than they could afford — well, help is on the way. Kind of. Those types of terms won’t be offered in 2009 and perhaps never again. Lenders took a little bit of the heat too, and you can expect that lenders will have a more conservative approach in 2009.
