Consumers Still Struggle to Pay Loans - TheStreet

The vaunted U.S. consumer is in hibernation these days, still trying to catch up on debt before he or she starts spending again. But a new study from Equifax says that consumers aren’t gaining much traction with their debt payments.

According to the Equifax (Stock Quote: EFX) monthly Credit Trend Report, which tracks the debt-payment progress via 200 million credit files, homeowners who are at least 30 days late on their monthly payments represent 7.91% of all U.S. homeowners in November of 2009. That’s up from 7.65% in October, and way up from 5.83% in November 2008, and from 3.93% in November 2007.

Home equity line of credit consumes are falling back as well, Equifax says. In November 2007, only 1.92% of all U.S. HELOC borrowers were delinquent. But that number has risen; to 2.95% in November 2008 and 3.39% in November 2009.

The good news is U.S. borrowers are making inroads in other areas, like car payments and credit card payments.

Equifax reports that U.S. credit card holders reduced their debt by 7.3% from November 2008 to November 2009. Auto loan holders did better, reducing their collective loan debt by 9.3% over the same time period.

The number of credit card accounts is down, as well. Credit card companies have closed 93 million accounts since July of 2008, and have also cut credit lines by $803 million.

No doubt card issuers are responding to a growing number of card delinquencies, which Equifax measures. According to the report, “the November 2009 60-days-past-due rate of 4.62 percent is almost a full percent higher than the November 2008 rate of 3.76 percent.”

It’s no secret that consumers need to keep up their debt payments to protect their credit scores. Even a single missed payment on a home or HELOC loan, or a credit card or auto loan, can send a borrower’s credit rating plummeting. In addition, being late on a single monthly debt can lead to higher interest rates for things like home loans, auto insurance or credit cards.

The reason? Creditors view you as a bigger risk if you miss a payment — so they ask for more money from you in the form of higher interest rates to accept that risk.

So, keep your monthly debt schedule in order by knowing the dates all of your debts are due. Better yet, pay the bills as soon as you get them. Sign up online on your creditors’ Web site and pay your bills electronically. The payments are recorded immediately and take any snail-mail malfunctions out of the way.

It’s not easy, but staying on top of your monthly debt payments can save you money, and protect your credit score — two worthwhile achievements in a sour economy.

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