For debt relief companies who sell services to consumers with unsecured debt, new data out from TransUnion says demand for debt relief services should remain relatively flat.
“The credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) remained steady at 1.19% in Q2 2015. The delinquency rate was relatively unchanged from 1.17% in Q2 2014,” says TransUnion.
Hand in hand with new account growth in the subprime credit tier (those consumers with a VantageScore® 3.0 credit score lower than 601) originations, the average new account credit line for subprime consumers continued to drop in Q2 2015. The average new credit line for this tier declined to $923 in Q2 2015, the lowest level since Q2 2012, when average new account lines reached $896.
“Subprime consumers continue to gain access to credit, but lenders have scaled back the average new credit line for this group,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. “Distribution of originations across risk tiers has remained relatively steady in the past year, indicating that lenders are deliberate and approaching subprime originations cautiously.”
Even average credit card balances have reduced from $5,234 to $5,199 over the past year.
But maybe future demand is brewing for unsecured debt relief providers. It looks like the under 30 crowd is loading up a bit. But that could also be a reflection of added pressure from student loans.
“The number of consumers under age 30 with a credit card balance rose to 20.73 million in Q2 2015, an 8.6% increase from 19.09 million in Q2 2014. The delinquency rate for the youngest consumer group remained above the national average in Q2 2015 at 1.80%. Average balances for the under 30 group rose slightly, up $19 from $2,135 in Q2 2014 to $2,154 in Q2 2015.”
Nonprofit credit counselors in Alaska, Washington, and New Hampshire should be feeling the most demand reduction pain for services offered in their states. Those states shows the largest reduction in delinquencies.
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