Americans Personally Impacted by COVID Economy Worried Even If Work Returns, Credit Will Not

Americans suffering personally from financial impacts of COVID ecomy worry, even when pandemic crisis wanes and ecomy begins to recover, that restoring ir credit may take some time and hinder ir purchasing power, according to a new report.

Potential for COVID Credit Crisis Looms Large: 61% of those impacted are concerned ir credit will be negatively impacted because of ir financial situation.

Americans at lower income levels, under $50,000 in annual household income, are particularly fearful, according to report from Finicity , called Combating Emerging COVID Credit Crisis. data from this group paints a stark picture of financial loss from COVID-19, credit anxiety, and lagging financial literacy.

Most respondents said that participation in future credit markets may require changes that let responsible borrowers better prove ir creditworthiness to lenders.

report proposes that eventual ecomic recovery from COVID recession will hinge on major purchases which require credit for most consumers and if that credit is withheld because of short-term impact from being out of work or at reduced income levels, n broer ecomic issues may result.

“This health crisis is likely to bring an impending credit crisis along with it, and a key component of ecomic recovery will be consumers’ ability to secure loans and credit needed to finance major purchases,” said Steve Smith, CEO and co-founder of Finicity. “Even when this crisis subsides and people return to work at ir previous income level, bouncing back from this hit to ir credit could still take years.”

report, which is based on a survey of 2,000 US respondents in June , found that 55% of all respondents have lost ir jobs or h ir income impacted because of COVID-19. Those job and income losses have put a significant financial strain on those impacted, report said, and are affecting credit us. Far more than half (64%) of impacted said personal ecomic conditions have me it difficult for m to keep up with bills and payments.

As a result of COVID-19 financial hardship, 61% of impacted are w concerned ir credit will be negatively affected. And, nearly all (95%) of impacted are concerned about ir ability to rebuild ir credit and finance purchases even after pandemic and recession pass.

Lower Income Americans Especially Impacted

A deeper examination of consumers with annual household incomes below $50,000 shows that pandemic created even more significant job and income losses, and also reveals an imbalance in credit opportunity for se lower income consumers.

report found 73% of those with a household income under $50,000 said this financial situation has me it difficult for m to keep up with bills and payments. That was significantly more than higher income levels: 57% of those with a household income between $50,000 and $100,000, and 54% of those with a household income over $100,000.

Changes in Credit Processes

large-scale loss of jobs and income in COVID ecomy, and mass anxiety over impact to credit scores and lengthy process of rebuilding credit, leaves many consumers looking for changes in credit review process, including 82% of respondents saying y believe current credit review process and criteria need to change to make it easier for responsible borrowers to demonstrate creditworthiness.

Many consumers want a better understanding of which personal financial data is used in lenders’ credit-decisioning process, and how that data is used. Consumers with lowest household incomes show least confidence in ir kwledge of ir financial data, as only 51% of those with a household income under $50,000 said y kw what financial information lenders are using to determine creditworthiness.

“ idea of improving credit process is t new, but overall number of people who have been simultaneously affected as a result of COVID-19 shines a light on what borrowers have been facing for many years. re’s clearly a need to evaluate credit-decisioning process and how consumers can become empowered to take control of ir own financial data, and benefit from its use,” said Smith. “Real-time and reflective data is key to broer inclusion in tritional financial system, and emerging open banking model will provide consumer empowerment needed while giving lenders a more robust picture of creditworthiness for borrowers.”