CHESSNOID

As always different sources try to spin the same stories as good and bad.  According to Transunion the delinquency has improved.  They base that on the data they collect (which they don’t do very accurately).  Just pull up your credit report and you will find some inaccuracies.

Nasdaq:

Consumer data collection firm TransUnion reported Monday that credit card delinquencies fell in the third quarter of 2009, the first time that had happened.

Typically, says TransUnion spokesman Clifton O’Neal, delinquencies rise in the third quarter – which the company defines as the period between July and September – due to vacation and back-to-school spending. But that trend was bucked this year as consumer sentiment shifts. People are using cards more wisely and paying down debt, a sharp reversal from the widespread profligacy of recent years.

Consumers’ change in attitude was reflected by both average borrower debt and the card delinquency rate: average debt declined to $5,612 from $5,719 in the previous quarter; delinquencies fell 5.98 percent from the second quarter to 1.10 percent of accounts outstanding.

That was the third quarter they made those claims on.  Then in October they mysteriously went up after “people became wise using credit cards and started paying down debt”.  Ha ha.  Sorry, I work in collections and know the real story behind credit card delinquency getting better despite unemployment getting worse. This report is more accurate and closer to the truth.

Nov. 23 (Bloomberg) —

U.S. credit-card delinquencies climbed last month to the highest level since February as five of the six biggest card lenders posted increases, Moody’s Investors Service said.

Loans at least 30 days overdue, a signal of future defaults, rose to 6.12 percent in October from 5.97 percent in September, Moody’s said in a report dated Nov. 20 and distributed today. So-called early-stage delinquencies, payments 30 to 59 days late, were unchanged at 1.66 percent.

Banks typically write off card loans after 180 days, and defaults fell last month to 10.04 percent from 10.72 percent in September, reflecting lower delinquency rates earlier in the year. Credit-card defaults and delinquencies tend to track U.S. unemployment, which climbed to 10.2 percent in October, the highest since 1983.

“Weak job creation, elevated bankruptcies and rising unemployment continue to weigh on results,” John McDonald, an analyst with Sanford C. Bernstein & Co., said in a Nov. 17 research note. “It still feels too early to declare victory.”

Write-offs may peak at 12 percent to 13 percent in 2010, Moody’s analysts Will Black and Jeffrey Hibbs said in the report.

JPMorgan Chase & Co., the biggest U.S. card lender, as well as Capital One Financial Corp. and Discover Financial Services this month posted October data that included their highest delinquency rates for 2009. American Express Co., the top performer this year in the Dow Jones Industrial Average, was the only of the six that didn’t report a rise in delinquencies.

As far as American Express bucking the delinquency trend, I will bet they are cooking their books.  Who are they trying to fool?  Oh yeah, their investors. They are not immune to a bad economy and high unemployment.  They just have more aggressive loan mitigation techniques that allow them to  re-age their credit cards to a current status with just one token payment regardless if you are 6 months past due.