CFPB Consumer Credit Data Shows Decline in Delinquencies


The data on the early impact of the COVID-19 pandemic on consumer credit reflects the hard work of lenders and accounts receivable management companies to help consumers manage their accounts.

9/3/2020 10:14

The Consumer Financial Protection Bureau issued findings this week that consumers have not experienced significant increases in delinquency or other negative credit outcomes during the COVID-19 pandemic.

These findings mirror experiences of ACA International members working with consumers on their accounts in the last several months.

Debt collectors continue to help consumers manage their payments, provide resources on hardship programs and suggest solutions that fit with their financial situation. Calls from consumers to the agencies were on the rise in recent months. Consumers sought help managing their finances and exploring hardship options as a result of the ongoing COVID-19 pandemic.

The steady flow of inbound calls experienced by ACA members and the accounts receivable management industry mirror the sentiment in the CFPB’s report.

According to the CFPB Office of Research report, “The Early Effects of the COVID-19 Pandemic on Consumer Credit,” on mortgages, student and auto loans and credit card accounts, new delinquencies declined between March and June 2020.

“Overall, our findings add to the growing literature on the effect of the COVID-19 pandemic on credit outcomes among U.S. consumers and households. The analysis shows a decrease in delinquency since the start of the pandemic and an increase in consumer assistance,” the CFPB reports in a news release on the data.

Creditors and lenders also increased payment assistance to borrowers, according to the report, which notes that outcomes may reflect payment assistance provided to consumers through the CARES Act.

“Student loan and first-lien mortgage accounts had the largest increase in assistance in terms of magnitude, but increases in assistance on auto loan and credit card accounts were substantial given that there was effectively zero assistance reported for consumers prior to the COVID-19 pandemic,” according to the news release. “Assistance appeared to be concentrated among borrowers residing in areas that were more severely affected by the COVID-19 pandemic and the associated shocks to employment.”

Additional findings include:

  • There was a slight reduction in the availability of credit card debt between March and June 2020. Credit limits on existing credit cards declined slightly, where prior to March 2020 there was a general trend of increasing limits. There was also an uptick in the closure of accounts by credit card issuers. In absolute terms, borrowers with very high credit scores accounted for most account closures.
  • Credit card balances also fell substantially at the start of the COVID-19 pandemic, then continued a steady decline through June 2020. The decrease in credit card balances was consistent across groups when broken down by credit score and various demographic factors.
  • Consumers did not appear to be accumulating credit card debt as a means of staying afloat financially. On average, credit card balances decreased by around 10% between March 2020 and June 2020, a drop consistent with other data that show a decline in consumer spending.

ACA members continue to work with consumers in setting up alternative payment arrangements for consumers experiencing unexpected hardships or, for example, during natural disasters like floods or storms.

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