Consumers who have only defaulted on home loans in the past are a far better credit risk for lenders than consumers who have not defaulted, but experienced delinquency across multiple accounts, according to new statistics from the credit monitoring bureau TransUnion. This is true across all types of new credit, including auto loans and credit cards.
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For example, mortgage-only defaulters fell into delinquencies of 60 days or more on auto loans 5.8 percent of the time, compared to 13.1 percent of those with a history of payment problems, the report said. In addition, when given a new credit card, 11.4 percent of those who defaulted on their home loans slipped into 60-day delinquency, while those in the other category did so 27.1 percent of the time.
“There appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit. “This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.”
Many consumers ran into problems making their mortgage payments as a result of extended under- or unemployment, rather than a general inability to afford their bills.