Consumer Credit Deteriorates, Index Shows
BOSTON (
) -- If you live in Mississippi and need credit -- good luck.
That state's residents are the most likely in the nation to default on a loan, according to consumer credit reporting agency TransUnion in its quarterly Credit Risk Index (CRI) issued today. Across the U.S., the CRI increased to 128.32 in the second quarter as the economy continued to slump, compared with 127.26 three months earlier. Mississippi's was 166.21, and North Dakota had the lowest, with 82.24.
The index measures the average probability of 90-day delinquency, or worse, among consumers. It uses the fourth quarter of 1998 as a baseline for comparison. A value of more than 100 represents a higher level of relative risk. The intent of the state-by-state breakdown is to offer financial institutions targeted information as they manage portfolio risks and marketing efforts.
From a consumer's perspective, banks or lenders that operate in a high-risk area could potentially modify credit offers or the amount of credit extended to balance the risk level in their portfolios.
The riskiest states after Mississippi were Nevada, at 162.74, and Texas, with 162.21. The least risky, following North Dakota, were in New England and the Upper Midwest, including Minnesota, at 89.67, and Vermont, with 92.44.
The states with the largest quarterly increases included Florida, with a 2.67% increase; Oregon, 2.65%; and Nevada, 2.37%. Those with the biggest decreases were Delaware, with minus 0.8%; New Mexico, minus 0.62%; and Montana, minus 0.60%.
Four states had double-digit increases in their CRI on a year-over-year basis, including Nevada, Arizona, California and Florida.
Still, the national rate of increase between the first and second quarters was the lowest since 2006, when there was a decline of 3.35%.
"After several quarters of significant increases in the Credit Risk Index, it appears that consumers are adapting their financial-management approaches to cope with the difficult times we are experiencing," says Chet Wiermanski, global chief scientist at TransUnion. "However, the nation's credit-risk level remains the highest it's been this decade, and though the level needs to decrease to reflect a strong lending environment, the deceleration of the growth in the index is a positive sign."
-- Reported by Joe Mont in Boston.
