A wealth of demographic and behavioral data is available to companies that sell and collect consumer debt. The data helps identify characteristics, preferences and goals of consumers who use credit. This information is critical because it helps control the supply and demand for the sale of consumer debt to collection agencies. The value of the data lies in deciphering what predictions can be made based on the latest credit market information.
Interpretation can sometimes be tricky. For example, a recent article in Collector magazine highlighted what appears to be conflicting forecasts about the consumer lending market. On the one hand, TransUnion predicts that the lending markets for credit cards and mortgages should be fully recovered by the end of 2016. However, the 2015 Credit Card Debt Study by CardHub takes a cautious stance about the sustainability of consumer spending in light of the large amount of outstanding credit card debt.
It might seem that the two forecasts are incompatible. The proper interpretation rests on the ability of creditors and collectors to understand how consumer credit is used and how consumer debt burden will be impacted. This information is important because creditors will need to know how much credit to issue, and on what terms. If the credit markets look weak, creditors may want to limit credit recipients to only stronger consumers. However, a robust credit economy bodes well for access to consumer credit.
Debt by Age Group
According to the Urban Institute, consumer debt peaks among adults between the ages of 38 and 52. More than half of consumers between 18 and 22 years of age have no debt, whereas a third of folks older than 77 are debt-free.
Debt Types Statistics
The New York Federal Reserve reports a widening income gap, with higher-income consumers shouldering most of the outstanding credit card and mortgage debt. As of mid-2015, there was $8.12 trillion in mortgage debt, followed by student loans ($1.2 trillion), auto loans ($1.01 trillion) and credit card debt ($703 billion).
One source of guidance in the collection of debts is the S&P/Experian Consumer Credit Default Indices, which highlight monthly changes in defaults. Consumer credit tends to increase as the default rates have gone down. Another good source of delinquency information is the American Bankers Association Consumer Credit Delinquency Bulletin.
Businesses that have accumulated delinquent debt have several options, but many have found it rewarding to turn to professional debt collection agencies to reduce the negative impact of unpaid debts.