Consumer Credit Defaults Hit Low
The U.S. economy has been sending some mixed messages recently. Although the unemployment rate has reached its lowest point in almost 50 years, the stock market continues to suffer serious losses while the housing market has cooled somewhat. Wage gains have also disappointed, though this is relative, as people are still seeing small wage gains compared to the year before.
Against this landscape, one data point should be a relief to those worried the U.S. is slipping into recession. According to a report by S&P/Experian, default rates have fallen to their lowest point in the year. In fact, they have fallen for five straight months now. This should be good news to lenders and to those looking to take out new loans.
Decreases Across the Board
The Consumer Credit Default indices track consumer defaults in major metropolitan areas. In September, all areas recorded decreases in their default rates. Miami, like other metropolitan areas, saw a decrease in its default rate, one basis point down to 1.56%. Although this was an improvement on previous months, we must note that Miami’s default rate is much higher than that for other cities in the report. For example, the default rate in Los Angeles was only 0.56%–substantially lower than Miami’s.
The decrease in defaults occurred across all loan types. Bank credit card default rates, for example, declined to 3.14%, which is the lowest level since December 2016. The default rates for other loan types were as follows:
- First mortgage: 0.82%
- Auto loans: 0.89%
- Composite: 0.82%
How Falling Defaults Can Help Consumers
With falling default rates and strong employment occurring throughout the country, lenders might be more eager to lend, which means those in the market for a loan might be able to get one. Interest rates continue to climb and should rise throughout 2019, but the rise in rates should not dissuade too many banks from lending.
If you are interested in obtaining a loan or getting a new credit card, you should check your credit score. You can buy your FICO score for $20 online or get a free score by signing up for a website like Credit Sesame or Credit Karma. These websites can also help you gauge your odds for approval. You will take a small hit to your credit score when applying, so make sure you only apply with those banks where you have a strong chance of success.
Contact Your Plantation Bankruptcy Law Firm
Even with a strengthening economy, many people unfortunately get left behind. Maybe you have suffered a sudden job loss or an illness that has buried you in medical bills. Whatever the reason, you are struggling financially.
At Nowack & Olson, our bankruptcy attorneys help people throughout South Florida get on top of their debts by seeking a consumer bankruptcy. We are happy to meet with you to discuss your options, such as a Chapter 7 or a Chapter 13 bankruptcy.
For more information, please schedule a free initial consultation with one of our attorneys by calling 866-907-2970.