Millions of Americans’ Credit has Been Destroyed Along with Their Lives and Livelihoods

Millions of Americans’ Credit has Been Destroyed Along with Their Lives and Livelihoods

It is bad enough to lose a job and not have another job in the wings. It is also bad enough that the rent or mortgage is due and those car payment notices keep coming in the mail. The credit card bills keep coming too.

Millions of Americans are dealing with the C-19 coronavirus chaos by skipping many of their bill payments.

A credit score can determine whether a job applicant is deemed financially stable or fit enough for a job. Credit scores are also the Key barometer used to determine future creditworthiness when it comes time to get a new credit card, apply to rent a place or take on a mortgage, buy a car and so on.

The instant recession from the Medical Malpractice has put millions of Americans in a bad position so fast that they just did not have time to prepare for the recession, being sequestered at home and unable to find any work.

According to the latest monthly estimates from TransUnion, there were almost 15-M credit cards in some form of financial hardship programs. These are typically payment deferral plans that allow credit card holders to skip or make reduced payments. While this represents about 3% of the outstanding accounts tracked, April was just the 1st entire month that the average American worker was in lock-down mode.

Almost 3-M auto loans were also in hardship programs with deferrals or reduced payments, and that is nearly 3.5% of the car loans tracked by TransUnion.

Note that a year ago only 0.5% of auto loans and 0.03% of credit card accounts were in hardship programs.

Mortgage deferrals were also way high. TransUnion’s monthly data showed that the mortgage hardship programs saw more than a 10X spike to 5.0% in April from 0.48% in March and the same 0.48% rate a year ago.

Personal loans in hardship programs more than 2X’d in just a month and rose more than tenfold from a year earlier. The April personal loan rate in financial hardship programs was 3.58%, up from 1.56% a month earlier and up from 0.3% a year ago.

While there may be some leniency and forgiveness that has not been there before, there is a challenge here.

For examples: 2 potential borrowers or job applicants come in and they are virtually identical in every demographic aspect and every other qualification, but 1 has maintained a credit score above 800 throughout the recession while the other 1 has seen their credit score fall drastically.

The Big Q: Who gets the Job?

The next Big Q: What happens over the Summer when so many seasonal factors, from family vacations, home buying, home remodeling to other traditional events, face the greatest challenge since the 1930’s?

And the next Big Q: Why was the entire country shut down to protect 5% of the population, the elderly who were already sick and dying?

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge. Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.