Since the end of the recession, consumers have shown an affinity for prioritizing their credit card payments over their mortgage bills, but new data suggests even their monthly balances aren't the most important payment they make.
Consumers seemed to be far more focused on making their car payments than any other lines of credit last year, according to a recent study by the credit bureau TransUnion. In all, just 9.5 percent of borrowers were late on their car payments last year while remaining current on their credit cards and mortgage bills. By contrast, 17.3 percent allowed their cards to fall delinquent while maintaining the others, and 39.1 percent were late on their mortgage payments.
"The reversal in payment patterns between credit cards and mortgages has been well documented, but our findings were illuminating because it had not been previously clear that car payments were considered a higher priority by consumers than both credit cards and mortgages," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.
Becker added that in many cases, other economic factors, such as still-high unemployment rates or depressed housing markets, might have played a role in causing consumers to focus on their autos instead of their other lines of credit. This was shown in states like Michigan and Florida, where housing is still struggling, and auto delinquencies remain in the low single digits even as other types of credit see late payment rates inflated above the national average.
However, missing any type of credit bill will be particularly injurious to consumers' credit standing, as payment history is the most important aspect of a borrower's credit rating.
