Obama, Elkhart and credit scores in America today

Shortly after President Obama first took office, he had a decision to make. Actually, he had many, many decisions to make, but this one stood out: Which American city should he visit first? While such a visit wasn't likely to have much in the way of a direct impact, it's full of symbolism - especially given the rough state of the economy in early 2009.

Obama decided to visit Elkhart, Indiana. And now, seven years later, he's returned to survey the changes the city experienced over the course of his presidency. 

There has been a lot of coverage and many reactions to Obama's visit and his speech. For this blog, we wanted to zero in on a single issue: credit. Directly and indirectly, Obama's Elkhart trip highlighted how important Americans' credit scores have become in the wake of the Great Recession, and why it's critical for individuals to do everything they can to understand and improve their credit scores.

Letter from Elkhart
For starters, the White House released a letter from a resident of South Bend, Indiana, detailing what the writer would like to say to President Obama when he arrived in Elkhart. The letter writer, Kelly Rizzo, noted that she'd also written the president in 2009, when her financial situation was in very rough shape.

Since then, Rizzo explained, she managed to modify her mortgage and stabilize her finances. However, she noted that not everyone in Elkhart has seen the same recovery. And credit has played a big role.

"As our community struggled to recover from the economic crisis, I watched around me as people's lives crumbled and their credit scores plummeted," Rizzo wrote. "It was a deeper problem than not being able to pay their bills that month - it affected their credit and their futures."

Planning ahead? Don't overlook your credit.Planning ahead? Don't overlook your credit.

RVs and credit scores
When Obama arrived in Elkhart to deliver his remarks, he, too, brought attention to the issue of consumer credit and how it's, in many ways, gotten more complicated in the wake of the Great Recession.

Discussing the challenges facing the RV industry - which functions as a major component of the city's economy - Obama said, "Part of what's happened in terms of the RV industry ... is basically people who want to buy an RV can't get financing right now even if they've got good credit.  So what we're going to be trying to do is to set up a whole new mechanism for helping people get consumer credit."

Consumer credit today
According to FICO, the average credit score for U.S. consumers is 695. What's a good credit score? As we noted in this article, Experian considers 670 to be the bottom limit for "good" credit. 

That means that millions of Americans share the same credit problems that continue to plague Elkhart's citizens. Just as importantly, millions of others do not have a credit score at all. 

"Your credit score and your future are inextricably linked."

These are serious issues. And as Rizzo pointed out, your credit score and your future are, in many real ways, inextricably linked. What's more, Obama was correct to note that a traditional credit score may not carry the weight it once did. Lenders and business owners are hesitant to extend their credit based solely on a FICO score.

But it's not all doom and gloom. Obama emphasized the need for a new mechanism to obtain consumer credit, and one such mechanism already exists: nontraditional credit, like PRBC. PRBC takes into account much more of a person's financial life - such as rent and utility payments - than FICO scores. This makes it much easier for people to build up their credit, since a low FICO score will often prevent you from qualifying for loans or credit cards, which in turn limits your opportunities to improve your FICO rating.

Companies are increasingly recognizing the value that nontraditional credit has to offer. No matter what your FICO score may be, sign up for PRBC to discover an alternative #creditscore that can open new doors.

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