SAN JOSE, Calif. —September 26, 2013 —The average debt held by consumers who are behind in their debt repayments rose 17 percent between 2007 and 2012, according to data released today by FICO (NYSE:FICO), a leading predictive analytics and decision management software company. The mean total debt for consumers who were 60+ days delinquent on at least one account grew from $53,706 (adjusted for inflation) in October 2007 to $62,642 in October 2012, fuelled largely by student loan debt and mortgage debt.
The biggest rise occurred in student loan debt, which jumped 89 percent over the five-year period for delinquent consumers. By contrast, the mean student loan debt rose 58 percent for consumers who were not 60+ days delinquent on any accounts. For delinquent consumers, the amount owed on student loans in October 2012 was also 66 percent higher than for non-delinquent consumers.
The mean mortgage loan debt was 14 percent higher in 2012 for delinquent consumers, whereas it fell by 22 percent for non-delinquent consumers. An even greater discrepancy occurs for all other credit (not including student loans, credit cards, mortgages or auto loans): the average debt rose 61 percent among delinquent consumers, whereas it fell by 28 percent among non-delinquent consumers.
“This is a tale of two Americas,” said Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Most Americans have deleveraged, bringing their total debt down, but debt loads have risen for the one in five Americans who have problems making payments. Ultimately it is up to the lenders and debt collectors to tailor their approaches to different consumers in order to increase their yield, and help customers get back on track.”
FICO Labs reviewed 10 million depersonalized U.S. consumer credit bureau records for this analysis. About 19 percent of the population were 60+ days delinquent in each sample.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended June 30, 2013. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
FICO and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.
Take the next step
Connect with FICO for answers to all your product and solution questions. Interested in becoming a business partner? Contact us to learn more. We look forward to hearing from you.