What is the rate of delinquency?
The delinquency rate is an expression of the number of loans in a portfolio with payments that are delayed by more than three months. The high delinquency indicates that debtors have difficulty repaying their loans. The creditors regularly calculate the rates of delinquency to determine the overall health of their credit portfolios. This information is included in property publication used by regulators and investors to assess the performance of financial institutions. Some banks can calculate this in terms of value rather than a number. Sometimes the calculation includes both the number of loans and the value of loans, so that the rate of delinquency becomes a perspective. In a simple example, if the bank has 1,000 car loans and 10 debtors is in delinquency, it has a delinquency of 1%on its car loans. This can provide important information used to generate loans to determine what types of loans and conditions it offers. The rate of delinquency divided by credit score is a common tool for creditors. The higher the credit SK isOre, the lower the number of delinques in this category tends to be, so debtors are less risky than low score debtors. Other demographic information that can be used for statistical analysis include gender, race and region.
The delinquency rate provides important information. They are influenced by a number of factors, including the characteristics specific to individual debtors, such as lack of interest in repayment of loans, as well as external factors such as overall economic health. When the economy is poor and people lose their jobs, they are increasing living and further pressures are increasing, more loans tend to go to the default settings, because people cannot represent them to pay or transform their financial priorities.
Since the rate of delinquency can be a measure of economic health, it is not uncommon for loans to be published by default. Media can report reports ofRegulatory bodies and government agencies involved in the determination of fiscal policy also use the announcement of a regular rate in connection with the stories of business and the economy. There is a motivation to maintain the rate of delinquency as low as possible, as the default loan values tend to have an impact in the financial industry that leads to a reduction in the availability of loan, banks' failure and other problems.