CFPB reports significant decline in payment information furnishing for credit card, retail revolving accounts since 2012

A review of information furnishing to consumer credit reporting agencies over the past eight years shows a steady increase in actual payment furnishing for installment loan products but a significant decline in such information furnishing for credit card and retail revolving accounts, a report released Thursday by the consumer financial protection agency shows.

The Consumer Financial Protection Bureau (CFPB), in its Consumer Credit Quarterly Trends report for November 2020, noted the importance of furnishing in lenders’ efforts to evaluate consumers and make decisions about what products are marketed to which consumers and the terms of credit consumers will receive. It noted particular importance of such data within the context of the current health crisis.

“As credit information is a critical input into the financial well-being of millions of consumers, describing trends in furnishing practices can help deepen policymakers’ and market participants’ understanding of the consumer reporting system’s key role in consumer access to credit, especially in the wake of the COVID-19 pandemic when credit standards have tightened and there has been increased strain on consumer finances,” the bureau said.

From November 2020 Quarterly Consumer Credit Trends (CFPB)

The bureau said Thursday’s report is part of a series on consumer credit trends using a longitudinal, nationally representative sample of approximately 5 million de-identified credit records maintained by one of the three nationwide consumer reporting agencies.

Among the key findings:

  • Shares of actual payment amount information in March 2020 were lowest for credit cards and retail revolving loans at 40% and 71% of tradelines, respectively.
  • The share of installment loans furnished with actual payment information ranged from 91% to 95% in March 2020.
  • Combined, credit card and retail revolving represent nearly 70% of all furnished tradelines, and therefore lower the overall share of tradelines with actual payment information to 65%. By contrast, the coverage of other data variables in a consumer’s consumer report, such as balance amount and credit limit, are consistently furnished across loan types.
  • Since 2012, the share of auto, student loan, and mortgage tradelines with actual payment data has generally trended upward. The share of mortgage tradelines with actual payment data increased most and rose from less than 70% in 2012 to 95% in 2020. By March 2020, student loan, mortgage, and auto loans contained actual payment information in more than 90% of tradelines.
  • While 95% of retail revolving tradelines contained actual payment data in 2015, the share declined to 71% in 2020.
  • The share of credit card tradelines containing actual payment data peaked in the fourth quarter of 2013, at 88%, and has since declined by more than half to 40%.

The bureau, in its conclusion, noted that the decline in shares of revolving and credit card tradelines with actual payment “may reflect attempts to prevent account poaching of consumers by other credit card issuers.” One observation in the report notes the competitive value of such data.

“Observed changes in the payments that a borrower makes towards an account may indicate whether a consumer’s credit behavior is improving or worsening. This, in turn, can have implications on consumer access to credit,” the report states. “Separately, this information also may be valuable for credit card and retail revolving lenders for competitive marketing purposes, … which may help to explain perhaps why some credit card and retail revolving lenders might be more reluctant to share payment data.”

The bureau said additional research could increase understanding of credit information markets and consumer access to credit, “such as determining whether the reduction in the supply of payment amount data has an impact on the terms or availability of credit for consumers.”

Quarterly Consumer Credit Trends (November 2020): Payment Amount Furnishing & Consumer Reporting

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