The United States credit repair services industry will reach $3.4 billion dollars in 2021. That’s a 5.2% annualized decline since 2016. The fact that fewer Americans are looking to repair their credit isn’t surprising since overall credit health surprisingly improved during the pandemic.
The credit repair services industry underperformed compared to the overall economy in the last five years and even declined faster than the advisory and financial services sector as a whole.
However, it may experience a resurgence in the coming years.
Credit-protective policies such as forbearance have helped many Americans stabilize and even increase their credit score since the pandemic began. Unfortunately, that credit boost may be short-lived since credit scores fail to capture the full extent of someone’s financial situation.
In addition, many Americans abstained from making decisions requiring a high credit score in the last year.
Unfortunately, as the pandemic winds down and a period of economic growth follows, we could see many Americans turning to credit repair companies to sustain that growth.
The Economic and Housing Research Group expects 30-year fixed mortgage rates to rise in 2021 to 3.4% in the fourth quarter and in Q4 of 2022 to 3.8%. One of the key factors affecting the credit repair industry, the rise of 30-year mortgage rates is also likely to foment growth.
Hopefully, lawmakers can continue to help reduce the pandemic’s effects on Americans as current protections start to expire. A combination of sound policy and individual credit monitoring will likely be the best approach for most.
