WASHINGTON–Consumers have not experienced significant increases in delinquency or other negative credit outcomes as reported in credit record data following the onset of the COVID-19 pandemic in the United States, according to an analysis released by the CFPB. But government relief may be playing a role in the findings.
“This is in spite of the sharp increases in unemployment resulting from the pandemic,” the CFPB said.
According to the Bureau, its report focused on mortgage, student and auto loans and credit card accounts from March 2020 to June 2020, but it also concedes that outcomes may reflect payment assistance provided to American consumers through the CARES Act.
The CFPB said it used its Consumer Credit Panel (CCP), a nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies, as the basis for the report, which found new delinquencies fell between March and June of 2020. The report also found increases in payment assistance from creditors and lenders to borrowers.
Student Loans & Mortgages
According to the CFPB, student loan and first-lien mortgage accounts had the largest increase in assistance in terms of magnitude, “but increases in assistance on auto loan and credit card accounts were substantial given that there was effectively zero assistance reported for consumers prior to the COVID-19 pandemic,” the Bureau said.
Assistance appeared to be concentrated among borrowers residing in areas that were more severely affected by the COVID-19 pandemic and the associated shocks to employment, the agency reported.
The CFPB report further found financial institutions reduced access to credit card debt both by closing existing lines of credit and by halting credit limit increases on open accounts.
‘Small in Magnitude’
“However, these effects were small in magnitude,” the CFPB said. “Both account closings and credit line reductions primarily affected borrowers with high credit scores, and many of the account closings were on cards that were closed for inactivity.”
The CFPB found credit card balances also fell substantially at the start of the COVID-19 pandemic, then continued a steady decline through to June 2020. The decrease in credit card balances were consistent across groups when broken down by credit score and various demographic factors, the CFPB said.
The report can be found here.