While fewer people expect they will be unable to pay at least one current bill or loan in the future, more of those who are not able to do so are not sure how they are going to come up with the money, according to data released recently by TransUnion. Of those who aren’t going to be able to pay at least one of their bills, medical bills, personal loans, private student loans, and rent were the debts most likely to go unpaid.
Nearly three-quarters of those consumers who participated in the survey say they will be able to pay their bills in the coming months, up from 66% who said so in the first quarter.
While fewer consumers reported that they are being negatively impacted, from a financial standpoint because of the COVID-19 pandemic, those who reported reduced income during the pandemic are not doing well. One-third of those individuals said their household finances have not recovered and 38% said their financial situations have actually gotten worse.
When asked to assess their financial situation, the two categories that were most popular among consumers were “stable” meaning household income has not decreased and finances are as planned, and “hopeful,” meaning household income has decreased but those individuals think their finances will recover.
Stimulus checks continue to be the most popular source of money for individuals to pay their debts, although that number is decreasing, according to TransUnion. More individuals are using money from their savings.
While a large number of individuals enrolled in accommodation programs during the pandemic, TransUnion’s data revealed that many of them continued to make payments on those accounts. Seven in 10 nonprime consumers and eight in 10 prime consumers made payments on hardship accounts while they were enrolled in forbearance programs or other types of accommodations.
“Traditionally, enrollment in a financial hardship program signified heightened consumer risk,” said Jason Laky, executive vice president of financial services at TransUnion, in a statement. “In the era of COVID-19, however, the consumer makeup of those accessing hardship programs has been much more diverse in terms of credit profiles. As situations have stabilized, we’ve found that consumers who exhibited key credit behaviors within the first three months of accessing an accommodation program performed well over the long-term.”
