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FICO Survey: Consumer Re-Leveraging Raises Delinquency Concerns in North America, but Two Cornerstone CU CEOs Say They Aren't Concerned about Delinquencies
Thursday, January 30, 2014 7:00 AM

As consumers continue to seek and receive more credit, some fear that delinquencies on auto loans and credit cards might go up, according to a new FICO survey.

Data from the U.S. Commerce Department showed consumer spending rising steadily throughout 2013, including a 0.5 percent increase in November. And data from the Federal Reserve found revolving credit for U.S. consumers reached a three-year high in October.

Carolyn Jordan, senior vice president with Dallas, Texas-based Neighborhood CU, says they have seen an uptick in credit cards and auto loans, but they aren’t concerned about delinquencies.

“The way I see it, our members are being smarter. They are taking advantage of the low-interest rate environment to refinance their car loans with the credit union and transfer balances on higher-interest credit cards to their credit union credit card that offers more competitive rates,” notes Jordan. 

By refinancing with the credit union for a lower rate, Jordan says members have more money in their pockets to save or pay more toward their debts. As far as delinquencies go, Jordan says not only have they not gone up, but in the last few months, they’ve actually declined.

David Dykes, president and CEO of First Family FCU in Henryetta, Okla., says their delinquency rate is right at one percent, and he’s not concerned about it going up.

“We serve a very low-income demographic, and our membership is used to living paycheck to paycheck. They know how much debt load they can afford to carry and they don’t over burden themselves,” Dykes says. “If they do hit a ‘bump in the road’, they pick up the phone and call us, and we do our best to work with them.”

According to Dykes, the credit union is 90 percent loaned out. Most of their loan growth, he says, has come from new members.

Click here to read the FICO Survey.