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Americans' credit scores fall as they struggle to pay billsUpdated | Comment | Recommend E-mail | Save | Print | DON'T MISS ANY PERSONAL FINANCE COVERAGE Sign up for USA TODAY's Managing Your Money e-mail newsletter.

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IT'S FREE By Kathy Chu, USA TODAYAs more consumers struggle with bills, their credit scores are paying a price.From the third quarter of 2008 to the first quarter of 2009 — the latest data available — the average TransUnion credit score dropped 6 points to 651, the credit bureau says.

Scores fell more dramatically in states hardest hit by the housing bust: California saw a 10-point drop, for example, and Arizona, 11."Consumers are feeling the bite of the current recession," says Ezra Becker, a director in TransUnion's financial services group.

"With delinquencies showing up in credit files, it's not surprising that the average score is decreasing somewhat."Becker believes credit scores aren't likely to improve — and could even drop further — through the second quarter of 2010.More than 200 million U.S.

consumers have credit scores, so a change of even a few points in the national average can be significant, experts say.The latest drop is based on TransUnion's TransRisk credit score, rather than the widely used FICO credit score.

Yet it's still a "meaningful" gauge of a possible trend because many of the same ingredients — including payment history and debt levels — go into calculating scores, says John Ulzheimer, a credit expert who used to work at Equifax credit bureau and Fair Isaac, the creator of the FICO score.Amid the recession, rising unemployment has made it harder for some consumers to pay bills, dragging down their credit scores.In the first quarter of 2009, credit card delinquencies hit a record high of 6.5%, while charge-offs reached 7.5%, a near-record high, according to the Federal Reserve.Banks are closing a record number of credit card accounts and reducing millions of dollars in credit lines.

That could boost the percentage of credit consumers are using, hurting their scores.Foreclosures also are ruining credit.

But in general, credit card problems take a greater toll on overall scores than mortgage woes.

That's because only 50.6 million households have first mortgages, while nearly all of the nation's 114 million households have at least one credit card, says Mark Zandi, chief economist at Moody's lenders tighten credit, scores have become more important in determining who gets a loan, and at what rate.

Advocates worry that falling credit scores could make it harder for borrowers to qualify for credit at a time when they most need it."It means that consumers really have to keep their eyes on the ball and focus on getting out of credit card debt," helping scores, says Ulzheimer, president of consumer education for Updated E-mail | Save | Print | To report corrections and clarifications, contact Reader Editor Brent Jones.

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