Creditforecast.com Study Shows Consumer Credit Recovery

In March 2012, CreditForecast.com, a joint product   of Equifax and Moody Analytics, projected steady economic growth in major lending sectors.  Auto, bankcard and consumer finance were back to pre-recession levels, while home mortgages still has the highest proportion of delinquencies. Consumer spending and auto financing have gained the most. Student lending has continued to increase because of the economy. Highlights of the study were broken down by four lending categories: consumer, student, auto, and mortgage.

Consumer Lending

Consumer balances decreased $187.8 billion from early 2009, which indicates consumers are paying down their debt. Pre-approved credit card solicitations have increased and credit card inquiries increased by 41 percent at Equifax since the recession low.

The number of new bank credit card accounts reached 10 million in 2011, which is the first time since 2008.  This trend is expected to continue during 2012 because of consumer optimism.  Retail sales increased by 7.7 percent in 2011, which was the largest increase since 1999.

Student Lending

Student lending has increased due to the poor job market, because some stay in college longer and others return to gain new skills. Delinquency rates of these loans have increased, with a high volume of accounts at least two or more payments past due or in collections. The study projected that unemployment will continue to drop in 2012, which will slow the increase in student loan debt.

Auto Lending

Auto sales have increased and so has auto financing.  Auto loan inquiries for credit increased by 27 percent at Equifax. The study forecasted that auto financing will continue to increase.

Mortgage Lending

Home mortgage outstanding balances decreased by $1 trillion or 10.4 percent since 2008 and continue to decline.  This category includes first mortgages, first liens, home equity lines and loans. Even though mortgage rates are at all-time lows, new mortgage loans haven’t increased, but refinancing has. Lender underwriting criteria is still tight and more than 80 percent of new mortgage loans are made in the prime risk segment, which are Equifax risk scores of 700 or higher.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Auto Loans, Credit Cards, Debt, Financial, Improving Credit, Money & Identity

This post was written by John Ulzheimer