TransUnion: Percentage of Consumers with Financial Accommodations Remains Elevated

TransUnion, Chicago, said its latest Financial Services Monthly Industry Snapshot Report shows 2.87% of accounts in the auto, credit card, mortgage or unsecured personal loan industries remained in some form of financial hardship status at the end of December.

The good news: the percentage of accounts in financial hardship continue to decline from a peak of 4.77% observed in May. Other findings:

–For the second consecutive month, the percentage of accounts in hardship decreased across all products on a month-over-month basis .

–30+DPD delinquency increased for auto and mortgage on a month-over-month basis.

–Serious level delinquency totals decreased across the board in month-over-month and year-over-year comparisons → Credit card balances decreased for the fifth month in a row .

–Overall product risk distributions remained flat, after seeing recent increases towards the super prime risk tier .

–Updated reporting provides views on the risk distribution for hardship counts for each product.

Additionally, the report said repayment preferences vary among surveyed consumers with loan accommodations. For instance, TransUnion said 25% of consumers want to resume regular payments and work with the lender to extend the length of the loan; 19% of consumers want to extend the accommodation; and 17% of consumers would like to create a repayment plan to catch up while making larger payments.

“There are still hundreds of thousands of consumers in some form of financial hardship status, and the more lenders can do to understand their customers’ financial situations, the better they can assist them and build trustworthy, long-lasting relationships,” said Jason Laky, executive vice president and head of TransUnion’s financial services business.

Laky said “innovative strategies and effective use of solutions combined with approaches already set forth by businesses and lenders will be major determining factors for enabling a thriving consumer credit market and empowering economic opportunity for consumers in 2021.”