Related Articles

National organizations called credit bureaus develop credit scores and credit checks for American banks. Sub-prime mortgages were so called because they were offered to less-than-qualified borrowers -- those whose credit scores were below the "prime" credit range. After this summer's subprime loan upheaval, the public wants to know: exactly what is a good credit score?

Despite the fact that most subprime mortgage loans were only offered by lenders to those who would be able repay them, the previously inconsequential subprime sector of the $10-trillion U.S. mortgage market was able to significantly disrupt the global credit markets, causing a quite dramatic 10% downturn in the domestic stock market with real, substantial losses and repercussions.

Within days potential loan applicants, with less than perfect financial histories, found that suddenly there was no money available. This was caused when many subprime lenders were forced to lay-off employees and close up shop. Those looking to take out loans for homes, cars, or other expensive items found that when they checked their online credit scores they were no longer eligible for loans that they would have been approved for just days earlier.

Credit bureaus have been flooded with requests for credit reports and help improving them. The positive development from the subprime loan debacle is that people are beginning to pay more attention to the repercussions of their financial histories, and credit bureaus are making this information more available.

Most loans, however, were only offered to those who could afford to pay them back, so it is troubling how the obscure subprime section of the $10-trillion U.S. mortgage market could have caused such worldwide havoc in the credit markets. But, it did, and along with a very sharp 10% correction in the domestic stock market, the pain this development caused was real and so were the losses.

Even though the current loan difficulties are making it hard for people to receive money for mortgages and other big loans, many experts believe the Federal Reserve will make cuts to its interest rates, making it easier for lenders and loan applicants to move the money necessary to keep the market afloat. This will make receiving and paying off loans possible again, and prevent a total bust on the economy.