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Comment by twblalock | Hacker News Reader

The contents of the article show that subprime loans are increasingly delinquent.

While there is definitely a correlation between having a low income and taking out subprime loans, it's not 1:1. Having a bad credit score is what pushes people into subprime rates.

Lots of people with higher incomes and bad credit end up with subprime loans, and many people with low incomes qualify for "normal" loans.

What this article basically says is "people with bad credit scores are increasingly delinquent on their high-interest car loans compared to the same time last year."

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There is enough correlation between income and credit scores to speak in generalizations. Of course there are exceptions, but generally speaking, there is a greater percentage chance lower income people have lower credit scores. It makes sense. Many people with limited financial resources are put into situations where they need to take riskier loans more frequently than those with greater financial resources. One link of many: https://www.creditsesame.com/blog/credit-score/the-relations...

The trend has been that people are using bailouts, stimulation, and low interest loan consolidation to pay down high interest credit accounts since the pandemic started. I worked in underwriting for a few years, into the pandemic. The FICO scores have been steadily climbing ever since the beginning of the pandemic, and even years before, despite the fact that consumer behavir was not changed. It's only my hypothesis of whats going on. Thankfully I don't work with credit anymore. I think this jives with your statement, but doesn't mean the article is meaningless overall.

I suspect that quite a few people used the stimulus, the rent forbearance, and the student loan repayment pause to spend money on things they couldn't otherwise have afforded. Unfortunately in some cases they used debt to do it.

But now that money is running out, and gas/food/rent got more expensive, and I bet some people who bought new cars they couldn't really afford are not making their payments on time.

However I also would bet that a decent portion of the people in that situation are not on a low income, but are just people who overspent on their car. I've seen people with six-figure salaries get too deep into car payments before. It's a really common problem.

You're not giving them enough credit. Pun not intended. They paid down high interest accounts with the spare cash hence the evidence I saw, fico score increase across the board. If they had just been taking on more debt with the same income, fico scores would decrease. It's essentially a ml model for predicting the risk of default.

Said another way, people who tend not to pay their bills on time, not paying bills on time.

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