how delinquency rates work
typically a lender will not report a loan as being delinquent until the borrower has missed two consecutive payments after which a lender will report to the credit reporting agencies or credit bureaus that the borrower is 60 days late in their payment if late payments persist then each month that the borrower is late the lender may continue reporting the delinquency to the credit agencies for as long as 270 days after 270 days of late payments the code of federal regulations considers any type of federal loan to be in default loans between borrowers and private sector lenders follow individual u s state codes that define when a loan is in default to begin the process of retrieving delinquent payments lenders generally work with third party collection agents the credit bureaus may give borrowers various delinquency rate marks on the individual tradelines included with their credit reports if a borrower is consistently delinquent they will receive marks for 60 days late 90 days late and so on if a borrower makes a payment and defaults again then a new cycle of delinquency appears on the tradeline when considering a borrower for credit approval credit agencies and lenders consider all of a borrower s delinquent marks often especially with corporate debt lenders will report total delinquency rates on loans according to the borrower s credit quality this can help investors gain insights into the risks involved with specific loans to calculate a delinquency rate divide the number of loans that are delinquent by the total number of loans that an institution holds for example if there are 1 000 loans in a bank s loan portfolio and 100 of those loans have delinquent payments of 60 days or more then the delinquency rate would be 10 100 divided by 1 000 equals 10 special considerations publicly reported delinquency ratesthe federal reserve system frs provides public data on delinquency rates quarterly across the u s financial market as of the first quarter of 2022 the most recent quarter for which data have been compiled the total delinquency rate from loans and leases at commercial banks was 1 40 residential real estate loans reported the highest delinquency rate at 2 13 consumer credit cards reported the second highest delinquency rate at 1 73 1