May 1, 2009
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News: Equifax CC Trends
Equifax Inc., one of the nation’s largest credit reporting bureaus, released its March Credit Trends Report recently to Reuters. To no surprise, the report confirmed lenders’ risks continue to trend upward as consumers find themselves deeper and deeper in debt. March’s credit card payment delinquencies of 60 days or more were up 38.3 % for same period 2008 amounting to 4.7 % of the total bank-issued cards. To offset the risks, lenders have narrowed their marketing strategies to reduce the number of new accounts. The number of new credit card accounts opened in January and February fell 38% from the same period last year. Lenders have taken additional measures by closing 20 million accounts reducing the number of open accounts on their books significantly from a year ago. Additionally, lenders lowered credit card limits to $3.16 trillion in March, down $425 billion since July 2008.
Credit card delinquencies were not the only trends to climb, an increase in mortgage delinquencies were visible as well. Nearly 7 % of all home mortgage payments were 30 days or more late, up a whopping 58.5 % from March 2008. The greatest hit were consumers with subprime credit scores of 619 or lower as 39.2 % were 30 days or more late in March, up 27.1 % from the previous year. For consumers with prime credit scores of 620 or above, the trend was not as strong with 1.2 % percent being 30 days or more late in March, up 1.1 % from February 2009 and 0.6 % from March 2008. Home equity loans, which often carry a credit card to access funds, realized delinquencies of 30 days or more that rose 3.4% of the total balances in March, up 45% from 2008.
The increasing trend of delinquencies appears to have forced many consumers to drastic measures, as personal bankruptcy filings rose 42 % from the same time 2008. With this continued upward trend of debt delinquencies and defaults, it’s no wonder consumers await anxiously as they watch credit card reform advocates lean harder and harder on lending institutions.