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Deloitte Paints a Troubling View of Consumer Lending

Posted By Invictus On December 5, 2010 @ 8:26 am In Consumer Spending,Credit,Current Affairs,Data Analysis,Economy | Comments Disabled

The new “first time defaulter” is the takeaway from a recent survey by Deloitte [1].  The major points:

• Individuals who have gone through at least one serious negative credit event in the last two years for the first time in their lives.

• 22% of Americans with bank accounts experienced a serious negative credit situation during the last two years. For fully 11%, this was a new experience — the first time in their lives they fell into delinquency. [Editor's note:  22%  is a stunning number to me; 11% is not far behind in terms of shock value.]

• Unemployment and reduced income were the principal reasons why these individuals have failed to meet their credit obligations.

• Many first-time defaulters rated their interactions with lenders during their negative credit event as “poor.” This dissatisfaction may strongly encourage them to look elsewhere when borrowing in the future.

• If not for the economic recession, which has affected millions of households in America, many of the first-time defaulters might have remained in good credit standing.


Negative credit experience during the last 2 years (1st-time defaulters)



Credit experience segments

click for larger graphics


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URL to article: http://www.ritholtz.com/blog/2010/12/deloitte-paints-a-troubling-view-of-consumer-lending/

URLs in this post:

[1] recent survey by Deloitte: http://www.deloitte.com/view/en_US/us/Industries/Insurance-Financial-Services/center-for-financial-services/aafe32a309d9c210VgnVCM2000001b56f00aRCRD.htm

[2] Image: http://www.ritholtz.com/blog/wp-content/uploads/2010/12/Negative-credit-experience.png

[3] Image: http://www.ritholtz.com/blog/wp-content/uploads/2010/12/Credit-experience-segments.png

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