Banks have pulled back sharply on lending to U.S. consumers during the coronavirus crisis. One reason: They can’t tell who is creditworthy anymore. Millions of Americans are out of work and behind on their debts. But, in many cases, the missed payments aren’t reflected in their credit scores, nor are they uniformly recorded on borrowers’ credit reports.
The confusion stems from a provision in the government’s coronavirus stimulus package. The law says lenders that allow borrowers to defer their debt payments can’t report these payments as late to credit-reporting companies. From March 1 through the end of May, Americans deferred debt payments on more than 100 million accounts, according to credit-reporting firm TransUnion, TRU +0.96% a sign of widespread financial distress.
https://www.nakedcapitalism.com/2020/06/wsj-says-banks-cant-determine-who-is-credit-worthy-morecovid-19-fallout.html (citing the Wall Street Journal)
So, the stimulus law says that borrowers can defer their debt payments and lenders can't report these as late payments. The result is that credit card issuers have totally stopped issuing new credit cards. (Well not totally, new credit cards issued dropped from 1.2 million per week in 2019 to 483,000 per week in May 2020).
No comments:
Post a Comment