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The trend has been that people are using bailouts, stimulation, and low interest loan consolidation to pay down high interest credit accounts since the pandemic
by beiller 4y ago
The trend has been that people are using bailouts, stimulation, and low interest loan consolidation to pay down high interest credit accounts since the pandemic started. I worked in underwriting for a few years, into the pandemic. The FICO scores have been steadily climbing ever since the beginning of the pandemic, and even years before, despite the fact that consumer behavir was not changed. It's only my hypothesis of whats going on. Thankfully I don't work with credit anymore. I think this jives with your statement, but doesn't mean the article is meaningless overall.
- twblalock 4y agoI suspect that quite a few people used the stimulus, the rent forbearance, and the student loan repayment pause to spend money on things they couldn't otherwise have afforded. Unfortunately in some cases they used debt to do it. But now that money is running out, and gas/food/rent got more expensive, and I bet some people who bought new cars they couldn't really afford are not making their payments on time. However I also would bet that a decent portion of the people in that situation are not on a low income, but are just people who overspent on their car. I've seen people with six-figure salaries get too deep into car payments before. It's a really common problem.
- beiller 4y agoYou're not giving them enough credit. Pun not intended. They paid down high interest accounts with the spare cash hence the evidence I saw, fico score increase across the board. If they had just been taking on more debt with the same income, fico scores would decrease. It's essentially a ml model for predicting the risk of default.