Are Women More Vulnerable to Debt and Collection Issues?

For many of us living in 2016, we would like to think that the days of discrimination based on gender are way behind us. Unfortunately, the world is not quite the ideal place to live that we would like it to be.

In the world of credit scores and debt collection, many women still have an uphill battle to fight as compared to their male counterparts. Evidence also suggests that the collection industry finds it easier to pressure women on payment issues than men.

One common stereotype that women must overcome is the idea that they are more likely to rack up significant debt through excessive shopping. But as you dive into the actual numbers, you will find that this couldn’t be further from the truth.

Men Vs Women: The Surprising Truth

Credit Sesame recently published some very interesting data that gives us a great representation of the battle of the sexes as pertains to debt collection and credit scores. Here are some of the key findings from that article:

  • Men, on average, have higher credit scores and more debt than women.
  • In each debt bracket, men have higher credit scores than women.
  • In each age bracket, men have higher credit scores than women.

So what does all of that mean?

The first bullet point paints the clearest picture of the overall situation. Men typically have higher credit scores than women, while at the same time having more outstanding debt than women. This holds true across all subsections of that group based on the amount of debt or the age of the person.

Despite the stereotypes against women that for some reason still exist today, men are actually much more likely to have more debt than women. However, the article also points out that women are more likely to have accounts go into collections than men. Let’s dig a bit deeper and see if we can find any meaning behind these numbers.

Common Debt Issues Many Women Struggle With

One of the primary reasons that women have lower credit scores than men despite having less overall debt is that women are still making significantly less income compared to their male counterparts. While income is not directly accounted for in our FICO scores, having more income does allow men to qualify for more credit and pay off debt faster.

Lower average income could also explain why more women see their debts go into collections than men. Women are also more susceptible to predatory debt collectors that are looking to intimidate consumers through illegal and unethical tactics.

There is also some evidence that women have more collections because they are more willing to help out friends and romantic partners by cosigning for them. This leaves them on the hook for someone else’s problems, which almost never ends well.

Harnessing This Information

So what can we learn from all of this data?

First of all, we can recognize that sexism is still alive and well here in the United States in 2016. On average, women make less money, have a harder time getting credit, and are more likely to suffer when things don’t go well. Anyone who doesn’t recognize that is simply not paying attention to the numbers.

Avoiding these natural prejudices can actually be profitable for both lenders and collectors if they are willing to recognize that they exist. Making an effort to judge each and every case based on the merits of the person involved, rather than based on your preconceived notions about that person, is a good policy to follow at all times.

By | 2017-05-09T14:47:30+00:00 May 30th, 2016|Press|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present