Consumer credit crisis: No sign of decline

You knew things were bad in the credit department, but now there are some new numbers to back it up: We’re collectively about 27% riskier credit bets than we were a decade ago, according to the TransUnion credit bureau. The firm’s national Credit Risk Index for the first quarter of this year clocked in at 127.3 compared to the 1998 start-point of 100. The index is based on the average weighted probability of 90-day delinquencies on mortgages, auto loans and credit cards.

TransUnion’s global chief scientist Chet Wiermanski didn’t even try to position the latest reading as a green shoot. “…(T)he index remains at an all-time historical high,” he commented, “indicating that delinquencies and foreclosures will continue to rise in the coming months.”

The five states that pose the biggest credit risk, according to TransUnion:

• Mississippi (Credit Risk Index of 166.45)
• Texas (162.59)
• Nevada (158.97)
• South Carolina (158.76)
• Louisiana (153.84)

The least risky states:
• North Dakota (82.02)
• Minnesota (88.53)
• Vermont (91.82)
• South Dakota (94.75)
• Iowa (95.26)

The high/low credit risk lists might suggest a new Weather Channel indicator: Is there something about cold-weather winter states that engenders better credit management? Okay, okay, what’s really at play is of course something more down to earth, like jobs. All five of the lowest-risk states have unemployment rates below the 9.5% national average.

The worst year-over-year Credit Risk Index changes occurred in poster-child states for mortgage duress: Arizona (up 14.8%), Nevada (up 14.4%) and California (up 13.8%).

You can check out your state’s delinquency rate for auto loans, credit cards and mortgage at
TransUnion’s website
. Even if your personal FICO credit score is sterling, merely being in a state with a high delinquency rate could expose you to more scrutiny if you plan on applying for any credit in the near future.

Cue up the chief scientist one more time:

“It is apparent that many of the states experiencing the highest increases in credit risk are the same when looking at the Credit Risk Index statistic on both a quarterly and yearly basis,” said Wiermanski in the release that accompanied the data. “This leads TransUnion to believe that consumers in these states will experience prolonged systemic difficulties in both their ability to satisfactorily repay their existing credit obligations and in their ability to acquire new credit.”

Ouch. Good luck with your mortgages and credit cards, everybody.

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