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Business & Technology

Credit agency: Tennessee consumers in ‘state of financial distress’

August 23rd, 2011 10:20 am by Kate Prahlad

Tennessee’s consumers are some of the most financially distressed in the nation, though conditions are improving slowly, according to an index published by nonprofit credit counseling and education agency CredAbility.
The index, which uses employment, credit, housing and net worth data in its calculations, shows Tennessee residents continue to struggle economically, especially in housing.
The state’s overall Consumer Distress Index was 65.59, up from 64.19 last quarter, the report said. The new level is the state’s best score since the fourth quarter of 2008.
A score below 70 on the 100-point scale indicates a state of financial distress. Only six states have lower scores than Tennessee.
Nationally, U.S. households remained just below the 70-point threshold, scoring a 69.2 in the second quarter, up from 68.15 in the first quarter of 2011. The most recent quarter is the 11th consecutive quarter the U.S. score has been under 70 ­— yet the score has risen for three consecutive quarters and for four out of the past five quarters.
Specifically in Tennessee, housing issues are holding back consumers, the index said.
Out of the 50 states, Tennessee ranks as the 7th most distressed state for housing, with a mortgage delinquency rate of 8.46 percent, compared to the national rate of 7.08 percent; the delinquency rate for renters was 10.39 percent, compared to the national rate of 9.8 percent, the index showed.
On the other hand, credit card delinquency rates continued to improve in the state, “and at 3.61 percent, are better than the national rate of 3.83 percent,” said the report, but it also noted that “despite improvements in this area, Tennessee’s number of consumer bankruptcies is among the highest in the nation at 11,814 in the second quarter.”
Nationally, lower mortgage/rent delinquency rates made the U.S. index higher, the opposite of Tennessee’s pattern.
“The improvement in the housing category is the single biggest reason for the increase in the index’s overall score. When we look at housing, one measure we track closely is the percentage of homeowners and renters who make their monthly payments on time,” the report said. “Both of these groups showed significant improvement. The percentage of delinquent homeowners nationwide dropped from 8.8 percent to 7.1 percent, and the trend for renters was similar.”

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