CFPB Report Examines Early Impact of Pandemic on Consumer Credit

Last month, the Consumer Financial Protection Bureau (CFPB) issued a report analyzing the early effects of the coronavirus pandemic on consumer credit. Focusing on mortgage, auto and student loans, and credit accounts from March 2020 to June 2020, the CFPB found that consumers have not experienced the considerable delinquency increases that were predicted at the onset of the pandemic.

“The analysis presented here overlaps with the timing of substantial assistance provided to consumers through the CARES Act and other federal, state, and local programs,” the report reads. “Absent these programs, the trends observed in this report may have differed substantially between March and June of 2020.”

The report found increases in payment assistance to borrowers, most notably in first-lien mortgage and student loan accounts. Increases in assistance for auto loan and credit card accounts were also substantial, likely because there was little assistance reported prior to the COVID-19 pandemic.

Many financial institutions reduced access to credit card debt by pausing credit limit increases and closing existing lines of credit, mostly for inactivity. Credit line reductions most significantly affected borrowers with high credit scores.

The report also found that credit card balances declined significantly at the start of the pandemic and fell steadily through June 2020. When broken down by demographic components and credit scores, the CFPB found that the declines in credit card balances were consistent across groups.

The information was compiled using the Bureau’s Consumer Credit Panel (CCP), a nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies.