Credit card delinquencies down as mortgage default rates improve

By , CardRatings contributor
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credit card delinquencies

According to new figures released by TransUnion May 5, American consumers are paying off credit card debt at the fastest rate since the economic downturn in 2008, while mortgage delinquencies are following a similar positive trend.

TransUnion is one of the three major credit bureaus that keep track of credit history and credit ratings for American consumers. Their quarterly Credit Risk Index describes the current debt climate and summarizes how customers are spending and paying back their debt.

Credit card delinquency falling

Despite the number of people who have struggled with the loss of jobs and income during the recession, the latest report from TransUnion shows a falling delinquency rate on credit card payments. The Credit Rate Index (CRI) for American consumers was 123.56 in the first quarter of 2011; 1.6 percent lower than in the previous quarter and 5 percent lower than the recent high point, 129.67 in the final quarter of 2009.

Low CRI is good news for banks, credit card companies and consumers alike, because it means that credit is being repaid and is therefore more readily available.

TransUnion report shows lower demand for credit

The CRI report is accompanied by more good news from TransUnion. Their report released May 16 shows that mortgage debt is being repaid more steadily than this time last year. Mortgage delinquency is down 3.4 percent compared to the same quarter a year earlier, and is expected to hold steady or continue to drop as homeowners become more able to fulfill their debt obligations.

Although many consumers are taking advantage of the best credit card deals and balance transfer credit cards to minimize their debt payments, the demand for credit is lower overall, says TransUnion's CRI report. The number of consumers requesting credit is at its lowest since 2000, though the decline is beginning to level off.

The lowest CRI was found in the Upper Midwest states, including North Dakota (80.30) and Minnesota (87.04), while the highest CRI figures were found in Nevada (159.26), Mississippi (158.74) and Texas (155.69).


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