Dian's Column
Dian's Archive


America's AAA-rating and our crappy credit score

By Dian Vujovich

According to Standard & Poor’s, there are 17 countries on Earth with a AAA -rating. The United States is still one of them, as of today. But if the mighty US had to obtain a FICO score, which it doesn’t, I’m guessing it would be tough to get a car loan.

Let’s start with the countries with that AAA -rating. Here, in alphabetical order, is the list according to S&P: Australia; Austria; Canada; Denmark; Finland; France; Germany: Isle of Man; Luxembourg; Netherlands; New Zealand; Norway; Singapore; Sweden; Switzerland; United Kingdom; and us, the United States.

If our country’s AAA -rating were to be lowered by that agency, or any other one, it wouldn’t be good. Why? Simply put because the trust others have had in the “full faith and credit” of US securities would be shot. Losing trust in anything is never good. Losing trust in something that concerns money and paying back debts owed, well, that’s triply never good.

So I got to wondering about our nation’s debt of some14-plus trillion dollars and if the US were like a person– who wanted to get say a car loan and had to fill out a credit report— what kind of FICO score would show up.

An individual’s FICO score determines the interest rate they are likely to pay when applying for things like a car or home loan. The highest FICO score available is 850. Someone with a FICO score between 760 and 850 has a credit score that’s considered “excellent”. A “poor” score is one between 580 and 619. A “very poor” FICO score would be below 579.

Scouting the Web, I found a site that attempted to calculate the United States’ credit score. The site is Loans&Credit address:

Data used in their calculations was from a couple of years ago when our national debt was only $11.8 trillion. So it’s not fresh info but still interesting.

Based upon that dated data, the FICO score they figured the US’s score to be 620. That means if the US were a person he would be considered a “poor” credit risk in FICOs eyes.

Given that our national debt has increased about 25 percent since the time of those calculations, I’m sure our FICO score would have fallen dramatically sliding us from under the “poor” to “very poor” heading.

As we all know, the higher your FICO score the sweeter life is with respect to the interest rate you’re given when borrowing money. In today’s world of tough financing that means a person with a FICO score of 800 might be able to obtain a car loan with an interest rate of next to nothing or likely under 5 percent.

On the other hand, the person whose FICO score is under 579, which America’s probably would be now, is looking at 12, 15, 18 percent or more if they can even find a bank willing to finance them.

And so it goes with money and ratings—agency, credit or otherwise.

I guess we all ought to be glad that FICO isn’t in charge of figuring a credit rating for the US.

On another front, if you’d like to see up to the minute figures on everything from the dollar amounts of our national debt, household debts, country expenditures and just about anything else you can think of visit: http://www.usdebtclock.org .

You’ll be both dazzled and amazed and your eyes will do twirlies by all the figures available at that site.

To read more articles, please visit the column archive.

[ top ]