Borrowers in midsize cities deemed a 'pretty low risk'

03.30.09
By Sarah Beldo

Obtaining a student loan or auto loan is still a viable option in a number of midsize cities across the U.S., despite a nation battling a credit drought.

According to new analysis conducted by the Wall Street Journal based on Moody's and Equifax data, a number of midsize cities - as opposed to big urban areas or small rural towns - have remained bustling centers of borrowing and lending activity for individuals and households.

This is somewhat surprising given news reports and consumer testimony before Congress about unfair credit card limit and interest rate changes as major banks with credit card portfolios try to minimize losses.
 
In fact, figures from a Credit.com survey released earlier this month show that one-third of consumers have had to adapt to account changes ranging from an increased minimum payment to a lowered credit limit.

However, the article from the Wall Street Journal shows that midsize cities may be bucking this broader national credit trend.

Ross DeVol, a director of regional economics at California-based think tank the Milken Institute, suggests in the article that certain midsize cities are benefitting from well planned economic development strategies, diverse sources of employment and lower costs.

Banks in some of these midsize cities hold low levels of bad debt including consumer loans for autos and homes that are not up-to-date.  Equifax vice president Jim Powers says in the Journal piece, "Most lending these days is pretty tight.  Anyone that is getting a new loan, the bank deems a pretty low risk."

But consumers in cities across the country are still battling generally tough economic conditions.  The government reported on Friday that personal income dropped by 0.2 percent last month - another sign that consumers may have trouble staying current on outstanding debt.

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A number of midsize cities have remained bustling centers of borrowing and lending activity.