Clark County residents with bad credit on the rise

A growing number of Clark County residents have a subprime credit score of 660 or less, according to the Federal Reserve Bank of St. Louis, which tracks the data via Equifax, an American credit bureau company.

Approximately 30.1 percent of county residents have a subprime ranking as of the second quarter, a percentage that has been rising steadily since the third quarter of 2021 when 27.7 percent of the county had a subprime score, according to the Federal Reserve report. This is the highest number of county residents with a bad credit rating since the first quarter of 2022 when 31.6 percent of residents had a subprime score.

Matt Hennessy, a local mortgage adviser, said the rise over the past few years is definitely a cause for concern and something to keep an eye on. He said personal savings reached a record high for local residents during the COVID-19 lockdowns of 2020, but with the expiration of pandemic-era financial support, many consumers are feeling the pinch.

“Government stimulus checks and forbearance programs during the pandemic provided temporary relief, but with these programs ending, some consumers are now facing financial strain,” he said. “This was accelerated by a moratorium on home foreclosures, student loan payments were deferred, rental payments to landlords were postponed, homeowners were able to enter forbearance agreements with their mortgage servicers, simply meaning no mortgage payments were needed to be made and could be deferred for several months. Oftentimes these deferred payments were added to the back of the loan via a loan modification agreement.”

Hennessy said in 2021 as the valley began to reopen and consumers locally, and across the country, went on a spending spree and quickly depleted their savings, which dropped the overall savings rate across the country back to pre-pandemic levels. He said this habit of overspending has unfortunately continued.

“In the Fed’s attempt to combat inflation, they increased the Federal Funds Rate, causing interest rates on credit cards to skyrocket in the 20- 25 percent range on average,” he said. “With a segment of our population struggling to control their spending habits and the unfortunate inability to make more than the minimum payments on the revolving debt, their credit scores dropped significantly.”

According to Wallet Hub, as of March of this year, Las Vegas residents rank 130th out of 182 cities with an average credit rating of 613. North Las Vegas is the lowest at No. 152 with an average credit score of 605, and Henderson tops the valley with a ranking of 55 with an average score of 638. Reno sits in 49th place with an average credit score of 642.

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.