Americans’ credit scores improved markedly last year, especially for people paying off student-loan debt. Median credit scores for all income groups had improved as of the third quarter of 2021, but student-loan borrowers saw the sharpest increases.
Americans’ credit scores improved markedly last year, especially for people paying off student-loan debt.
“Although the COVID pandemic has taken a heavier toll on lower-income Americans, our data suggest that most borrowers — including those in lower-income areas — have been managing their financial responsibilities and debt repayments,” the authors wrote. “We plan on monitoring how lower-income households weather the unwinding of policy interventions that have enhanced their financial stability during the past two years.
Government assistance, including cash infusions in the form of stimulus checks and temporary halts on monthly loan payments, helped improve borrowers’ ability to pay off their debts, the New York Fed researchers said. “‘The financial impact of waning fiscal relief and debt moratoria on low-income households will be a key issue to monitor in the coming quarters.’”
The report analyzed anonymized data from the credit-reporting agency Equifax EFX, +0.32% merged with geographic income data from the U.S. Census Bureau’s American Community Survey. It did not track payday loans or rent payments.Auto loans. Driven by sharp increases in the cost of both new and used cars during the pandemic, auto-loan balances rose faster than any other type of debt from 2019 through the third quarter of 2021.