Give Hawaii credit


POSTED: Thursday, April 30, 2009

TransUnion's credit risk index for U.S. consumers has reached a record level, but the habits of Hawaii's consumers ranked sixth among the least risky in the nation.





        Hawaii is the sixth least risky state in the nation for consumer default, according to a Credit Risk Index from TransUnion.



















































Highest risk states
So. Carolina155.95
New Mexico142.04



Lowest risk states
North Dakota79.67
South Dakota92.90





The Chicago-based company, which publishes a Credit Risk Index so lenders can measure the regional risk of default and delinquency rates, reported yesterday that American consumers are more likely than ever to skip paying their bills, default on loans or fall behind on payments. During the fourth quarter of 2008, TransUnion reported that credit risk in the United States rose 5.41 percent from the same period in 2007. However, the index rose 24.79 percent from 1998, the year TransUnion chose as its baseline because it represented a normal year in the economic cycle.

“;The current level of TransUnion's Credit Risk Index represents the turbulence and the economic hardships faced by consumers in today's volatile economy,”; said Chet Wiermanski, group vice president and global chief scientist, analytics and decision services. “;The nearly 6 percent quarterly increase within the index by the conclusion of 2008 is noteworthy not only in hitting a record high, but also for the magnitude of the increase, reflecting in part the impact of the current recession on the health of consumers.”;

Compared with the rest of the nation, though, Hawaii has a cleaner bill of health, said Clifton O'Neal, a TransUnion spokesman.

“;The index shows that residents and consumers in Hawaii are tending to manage their credit better,”; O'Neal said.

Since lenders use the index to make portfolio decisions, Hawaii residents could find that they have access to a wider range of loans than higher risk regions, O'Neal said.

“;When lenders look at Hawaii, they will see that they are less risky than the majority of other states,”; he said.

While TransUnion's credit risk index rose to 124.79 at the end of 2008, the company assigned an index of 94.85 to Hawaii. Only North Dakota, Minnesota, Vermont, South Dakota and Iowa were ranked lower for risk, O'Neal said.

“;Typically, those areas have very conservative Midwestern values that spill over into how they manage their resources,”; he said.

Likewise, Hawaii's lending environment has always been characterized as conservative. While O'Neal said much of the rise in credit risk nationwide came from record mortgage delinquencies, fewer local banks and borrowers resorted to exotic mortgages.

“;It's our culture here,”; said Rusty Rasmussen, vice president for Castle & Cooke Mortgage. “;The family tends to pool resources and they help out if someone does get into trouble.”;

Having to have enough reserves to meet high mortgage obligations keeps many kamaaina fiscally conservative, said Stephany Sofos, a Honolulu-based real estate analyst.

“;We have to be more careful about how we spend our money,”; Sofos said.

While Hawaii residents do tend to carry less debt than the national average, the number of people in serious debt is rising, said Wendy Burkholder, executive director of the Consumer Credit Counseling Service of Hawaii.

“;Our caseload has doubled in 18 months,”; Burkholder said, adding that CCCS saw 1,300 clients in 2007 and expects to see more than 3,000 this year.

The average debt load of Burkholder's clients has grown, too, she said.

“;Four years ago, it was $14,000,”; she said. “;Now, it's $22,0000.”;