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Research and Statistics

Fewer Americans fell behind on debt payments in the pandemic

Experian data show seriously delinquent card and loan accounts fell by more than half in Q3 2020

Summary

Among the bright spots of a difficult 2020 is that fewer Americans fell behind on their credit card and loan accounts, according to new data from Experian.

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The past 12 months have been a year like no other, with the coronavirus pandemic tearing through much of the U.S. and global economy. But among the surprising consequences are various positive impacts, such as fewer Americans falling behind on their credit card and loan accounts.

Late credit accounts down by a third to a half

In its recently released 2020 Consumer Credit Review, credit reporting agency Experian revealed that among consumer debt accounts (e.g., credit cards, mortgages, auto loans, etc.), the share of delinquent accounts dropped by more than a third to more than half relative to 2019 levels, based on 2020 Q3 data for different delinquency stages.

The proportion of accounts that were one month behind dropped 37% in 2020, from 8.6 per 1,000 accounts to 5.4. Similarly, those that were up to 60 days delinquent dropped 36%, from 4.4 to 2.8 accounts per 1,000.

More seriously delinquent accounts – those late by 90 or more days – saw the most dramatic drop from 2019 to 2020’s third quarter, dropping from 12.5 accounts per 1,000 to just 5.8, for a drop of 53%.

See related: Many consumers are still getting help with debt

Experian speculates that some of the drop in delinquencies is likely attributable to the various financial supports put in place by the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law in March, which provided cash stimulus checks, enhanced unemployment benefits and guidance to lenders on granting financially struggling borrowers more leniency on their debts.

In addition, the CARES Act mandated that mortgage lenders allow some of their borrowers to enter temporary forbearance on their home loans, while it also suspended federal student loan repayments.

What’s unknown is how much these current delinquency rates will change as the pandemic continues but Covid relief measures eventually expire.

Experian’s findings are based on analysis of consumer credit report data and were released Jan. 4.

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