Bucking traditional beliefs regarding secured and unsecured credit, the risk of consumers with high credit scores defaulting on their mortgage is higher than the risk of this group defaulting on their credit cards, according to the FICO Score Trends Service.
In 2009, 0.3% of consumers whose scores were between 760 and 789 defaulted on their real estate loan, compared with 0.1% who defaulted on their credit card.
For the entire credit spectrum, in 2008-09, credit card accounts were just 1.6 times more likely to become 90 days delinquent; in 2005, they were over three times more likely.
Mark Greene, chief executive of Minneapolis-based FICO, said, "Economic instability is creating unknown risk in lenders' credit portfolios as well as counter-intuitive trends in consumer behavior."
On the originations side, FICO statistically showed that lenders tightened their credit criteria for giving new loans. In 2005, nearly 46% of consumers who got a new mortgage had a credit score under 700. In 2008, this fell to 25%.