Consumer Delinquencies Slow During Pandemic

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The unprecedented economic impact of COVID-19 has jolted U.S. consumers, leaving many worried about their personal finances. In addition to anxiety about day-to-day expenses, the pandemic has also left many wondering how they'll manage existing debts, especially consumers facing lost or reduced incomes.

Despite record unemployment and widespread pay cuts, a review of early credit report data shows that delinquency is actually down across most credit products. The average number of delinquencies overall has fallen in the past six months, a trend that can be seen across mortgage, credit card, personal loan and auto accounts, according to Experian data.

Read on for insights and analysis on how delinquencies have changed since the beginning of the coronavirus pandemic.

Experian Analyzes Delinquencies During Pandemic

As part of our ongoing commitment to help consumers manage the impacts of COVID-19, Experian analyzed internal data to show how consumer delinquencies have changed in recent months. Our analysis is based on historic monthly consumer credit data, unless otherwise noted.

The data used for this research is based on a nationally representative sample of Experian's main consumer credit data. The data attributes and sample sizes for this research may not exactly match other Experian analyses, and thus a slight variance in some statistics may exist.

As Americans continue to manage the effects of the pandemic, the data included in our analysis will continue to evolve. The information included here represents only a momentary snapshot of consumer delinquencies. As time goes on—especially as certain economic stimulus and relief measures expire—these trends may change. We will continue to publish additional insights as newer data becomes available.

Delinquencies Down Overall Since Onset of Pandemic

To measure delinquencies, we looked at the average number of instances in which a consumer had an account that was 30, 60 or 90 days delinquent in the past 12 months. Though the average number of instances per consumer is relatively low (less than one instance per person), the rate of decline over the past six months has shown that overall consumer delinquencies are trending down.

Between January 2020 and June 2020, average instances of consumer delinquencies across all delinquency ranges (30, 60 and 90 days) declined by at least 2.4%. The average number of 30-day delinquencies saw the greatest decrease, shrinking by 8.7% since January.

Much of this is likely due to consumer accommodations lenders have made during the pandemic, including the ones mandated by the Coronavirus Aid, Relief and Economic Security (CARES) Act. With more consumers in forbearance, or with payments deferred through some accommodation, the decline in new delinquencies is understandable, as repayment for many loans has been paused.

Average Delinquencies per Consumer
30 days delinquent-8.7%
60 days delinquent-2.5%
90 days delinquent-2.4%

Source: Experian data from January 2020 to June 2020

Overall Delinquency in States With Top Populations

For 30-day delinquencies between January and July 2020, the national trend held in nearly all states, with the exception of New York. Consumers in California reduced their average number of 30-day delinquent accounts by 8.2%—nearly the same rate observed across the country. Consumers in Texas, Florida and Pennsylvania outpaced the national rate, shrinking their average number of 30-day delinquent accounts by 9.7%, 10.9% and 11.7%, respectively.

In New York, consumers only saw a 1.8% decrease in their number of 30-day delinquencies during the same period, which may foreshadow what's to come for other states in months ahead. New York was one of the states hit hardest by the pandemic, and was one of the earliest to implement and sustain stay-at-home orders.

Alternatively, Texas and Florida saw the intensity of COVID-19 spread months after New York's peak, and consumers in those states may have gained some ground pairing stimulus efforts with more relaxed stay-at-home guidance. Here's how it looked in the five most populous states:

Average 30-Day Delinquencies per Consumer
New York-1.8%
Pennsylvania -11.7%

Source: Experian data from January 2020 to June 2020

Mortgage Delinquency Saw Largest Decrease of Any Credit Type

To measure delinquency across individual credit types, we looked at the average number of trades ever 30, 60 or 90 days delinquent in the past 24 months. Again, these consumer averages may be minimal, but the difference between January and June highlight the change that occurred in the past six months.

Mortgage loans saw the greatest decline across the main credit products, with the average number of accounts 30 to 59 days past due decreasing by 4.7% between January 2020 and June 2020, according to Experian data. The number of accounts ever severely past due (90 or more days) saw the largest reduction, 6.2%.

Mortgage Accounts Ever Delinquent per Consumer
30 or more days delinquent-4.7%
60 or more days delinquent-5.5%
90 or more days delinquent-6.2%

Source: Experian data from January 2020 to June 2020

Credit Cards

Credit cards saw the second greatest decline in delinquent accounts, with consumers decreasing the average number of accounts ever 30 to 59 days past due by 3.9% between January 2020 and June 2020, according to Experian data.

Credit Card Accounts Ever Delinquent per Consumer
30 or more days delinquent-3.9%
60 or more days delinquent-4.6%
90 or more days delinquent-4.1%

Source: Experian data from January 2020 to June 2020

Personal Loans

Among personal loans, consumers saw their average number of accounts 30 to 59 days past due decline by 2.9%, according to Experian data. That's the third-largest reduction of 30-day delinquencies seen consumers across major debt types.

Personal Loan Accounts Ever Delinquent per Consumer
30 or more days delinquent-2.9%
60 or more days delinquent-2.1%
90 or more days delinquent-1.9%

Source: Experian data from January 2020 to June 2020

Auto Loans

Auto loan accounts also saw a decrease in delinquency, with consumers reducing their average number of trades ever 30 to 59 days delinquent by 1.9%, according to Experian data. Auto loans saw the smallest delinquency reduction of any credit type. Consumers' average number of past-due accounts decreased for the 30-day and 60-day delinquency periods, but increased for the 90-day delinquency period by 0.3% during the first six months of 2020.

Average Auto Loans Ever Delinquent per Consumer
Average number of accounts ever 30 or more days delinquent-1.9%
Average number of accounts ever 60 or more days delinquent-0.5%
Average number of accounts ever 90 or more days delinquent0.3%

Source: Experian data from January 2020 to June 2020

Delinquencies May Rise as Pandemic Aid Expires

While it's impossible to know for sure, the $2 trillion CARES Act signed into law in March likely contributed to the recent decline in delinquency rates. This economic stimulus package included temporary financial assistance to U.S. consumers, among other things. A $1,200 one-time payment was distributed to many U.S. adults, and expanded unemployment benefits included an extra $600 per week for unemployed workers until this benefit expired in July. Executive action to extend unemployment payment increases was signed August 8, but payouts will be reduced.

The law also provided guidance for lenders on borrower accommodations for those that had been impacted by the pandemic. Included in this was a mandate that lenders and servicers of federally backed mortgages allow those impacted by COVID-19 to place their loans in forbearance. Additionally, most federal student loan collection was halted and the interim interest rate set to zero.

These mandates paused repayment for many borrowers (some automatically and some through an opt-in forbearance), offering much-needed breathing room to consumers managing their financial situation.

Any repayment paused through the CARES Act also required that lenders report the accounts as current to the credit bureaus, as long as the account was up to date at the time the accommodation was made. This is likely contributing to the decline of delinquencies, as when a consumer's repayment is "paused," they cannot become past due.

Between the supplemental cash from the stimulus payments and unemployment benefits, and the suspension (or option to suspend) some repayment, many consumers have avoided falling behind on debt—at least for now—and this could be driving the reduction in delinquencies.

It's important to remember that this data only represents a snapshot of how consumers are doing, and as the pandemic continues to impact local economies, and as aspects of the stimulus expire or are reduced, delinquencies throughout the U.S. could change. We will continue to monitor the data and publish relevant insights as conditions change in the coming months.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.