New data highlights one key measure of the financial impact of the coronavirus pandemic on the U.S. population. This is data in relation to credit and the reading is not good for the state of the economy or for the impact upon mnay households. The data reveals that over half of U.S. citizens have experienced job or income loss from COVID-19, with that figure jumping to 62 percent for those making less than $50,000 per year. Those impacted are struggling to keep up current on payments, and are worried about the impact to their credit and their ability to rebuild it.
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The overall impact leaves the U.S. facing a costly credit crisis, which is set to become an even more challenging scenario for the post-coronavirus economic recovery, whenever it comes.
The data has been compiled by Finicity (an analyst firm recently acquired by Mastercard). The company surveyed U.S. consumers about the financial impact of COVID-19. The data makes for stark reading.
For example, 55 percent of respondents have lost their jobs or had their income impacted because of COVID-19. The impact has been felt disproportionately in relation to social class, with those with lowest household incomes make up the greatest percentage of lost jobs or income (therefore, the coronavirus crisis has hit lower income working class people the greatest).
The data also reveals that 64 percent of those impacted have said this has made it difficult for them to keep up with bills and payments, a number that jumps to 73 percent for those with the lowest incomes, gain reflecting skewed nature of the U.S. economy.
With those who are most heavily impacted by the economic crisis, 61 percent of those impacted said they are concerned that their credit will be negatively impacted because of their financial situation. In terms of confusion around credit ratings, 95 percent of those impacted said they are concerned or somewhat concerned about their ability to rebuild their credit or take out a loan following this financial situation
The data suggests that at some level the current credit review process and criteria needs to change to make it easier for responsible borrowers to prove their creditworthiness. The current system involves lenders, such as banks and credit card companies, use credit scores to evaluate the risk of lending money to consumers.
