CHICAGO–TransUnion’s May 2021 Consumer Credit Snapshot reveals accounts in financial hardship status have dropped significantly compared to one year ago.
The study is based on an examination of the status of financial hardship programs that were entered into by consumers (peaking at 7% of all accounts) for credit products including auto loans and mortgages.
Accounts in Financial Hardship Status Down Markedly from Early Stages of the Pandemic
| Percentage of Accounts in Financial Hardship | May 2021 |
May 2020 |
March 2020 |
| Auto Loans | 2.09% | 7.04% | 0.64% |
| Credit Cards | 2.16% | 3.73% | 0.01% |
| Mortgages | 4.07% | 7.48% | 0.48% |
| Unsecured Personal Loans | 2.35% | 6.15% | 1.56% |
The Findings
Among the findings:
- 70% of non-prime consumers and 80% of prime and above consumers made payments on hardship accounts while they were enrolled in such programs. Additionally, more than 40% of accounts in these programs exited within the first three months of entering.
- Consumers who were deemed “early exiters” (those who exited on all of their hardship accounts by month three) were lower risk than those who were enrolled in the programs for a longer period. Those who exited early were also less likely to experience continued struggles and leverage financial accommodations again, TransUnion said.
- Roughly 80% of these early-exiters stayed out of hardship programs nine months later. “This trend was consistent across all risk tiers, but prime and above hardship consumers performed exceptionally well and showed a significantly lower delinquency rate if they exited the hardship program early – especially compared to non-prime early exiters where the future performance difference was less pronounced,” the company said.
‘More Diverse’
“Traditionally, enrollment in a financial hardship program signified heightened consumer risk,” said Jason Laky, EVP of Financial Services at TransUnion. “In the era of COVID-19, however, the consumer makeup of those accessing hardship programs has been much more diverse in terms of credit profiles. As things stabilize, we’ve found that consumers who exhibited key credit behaviors within the first three months of accessing an accommodation program performed well over the long-term.”