As the number of repossessed houses increased nationwide, the credit scores of American consumers continued to fall, based on studies of first quarter credit scores.

The glut of repossessed houses across the nation devastated the housing sector and related industries and ultimately the whole economy. The recession that resulted made millions of American consumers struggle to pay their bills and mortgage loans, causing more repossessed houses.

According to credit bureau TransUnion, its average credit score dropped in the first quarter to 651, a decline of 6 points compared to last year’s third quarter. Credit scores declined more steeply in states battered by repossessed houses like California and Arizona. Scores dropped by 10 points in California while scores dropped by 11 points in Arizona.

Ezra Becker, director of financial services for TransUnion, said delinquencies arising from the recession are appearing in credit records, so the average credit score is declining.

Becker expects credit scores to decline further until the second half of 2010.

Economists said that a seemingly negligible change in the average credit score is significant because there are over 200 million American consumers who have credit scores.

Although the credit score analysis was based on the TransRisk credit score of TransUnion rather than the more popular FICO credit score, the data is still significant because TransUnion also uses the same factors as what FICO uses in calculating credit scores. Credit analyst John Ulzheimer, who worked with Equifax credit agency and with Fair Isaac which developed the FICO score, said TransRisk also uses debt levels and payment history in computing credit scores.

For the period January to March, delinquencies in credit card payments reached a record level of 6.5 percent while charge-offs hit the near-record level of 7.5 percent, based on Federal Reserve data.

Banks have also been tightening credit, closing record numbers of credit cards and cutting down credit lines by millions of dollars. The credit line reduction increases the credit percentage used by consumers, worsening their credit scores.

Large numbers of repossessed houses have also hurt credit scores. But according to Moody’s Economy.com chief economist Mark Zandi, credit card troubles have greater impact on overall credit scores than mortgage problems because there are only about 50.6 million families with first mortgages while almost all of the country’s 114 million families have at least 1 credit card.

Lastly, consumer advocates are concerned that declining credit scores and increased effects of repossessed houses are making it more difficult for American consumers to obtain credit during the time they need it most.