According to a survey of banking professionals undertaken by FICO, the company behind the nation’s credit scores, car loan and credit card delinquencies are predicted to rise substantially over the next six months.
While credit bureau TransUnion recently reported a drop in car loan delinquencies, defined as late payments of more than 60 days, the banking professionals who responded to the survey predicted an increase in missed payments.
Among those surveyed who managed car loans, a whopping 96 percent predicted delinquencies to either rise or remain the same moving forward. Credit card managers had a similarly pessimistic view, with 85 percent predicting a rise or leveling off in delinquencies and defaults.
Those with bad credit should know that making payments on their car loans can actually help them improve their credit scores. But taking on a loan that will eventually become delinquent can ruin their credit further. Before making any decisions, prospective borrowers should use a car loan calculator to sort out their finances and figure out if a loan is right for them.