The subprime crisis caused many consumers to default on debt payments
Los Angeles, CA (PRWEB) May 24, 2012
The Credit Repair Services industry largely moves countercyclical to the business cycle; as such, the recession increased demand for credit repair services due to rising unemployment and falling disposable income. These factors, coupled with an increased debt load taken on by many consumers during the housing boom, caused many households to fall behind on payments. Consequently, says IBISWorld industry analyst Kevin Culbert, “The rising number of consumers having debt problems has increased the demand for credit repair services over the past five years.” In the five years to 2012, IBISWorld estimates that revenue for the industry will grow at an annualized rate of 3.9% to $9.8 billion, including growth of 1.9% in 2012.
Prior to the recession, the amount of consumer debt increased to a record high while the personal savings rate declined to a record low. Strong economic growth caused overly confident consumers to take on exorbitant amounts of debt. An increase in the average consumer's outstanding debt occurred largely because banks offered home loans to a larger proportion of the population. Ultimately, these factors set the ball in motion for the industry when the housing bubble burst. “Consumers that were overextended on credit lines were particularly vulnerable when house prices began to fall and the unemployment rate started to rise,” says Culbert. Ultimately, more consumers have turned to credit repair services over the past five years for a variety of services, including credit repair consultations and credit reestablishment. Rising demand has caused more firms to enter the Credit Repair Services industry, which remains highly fragmented. In the five years to 2012, IBISWorld estimates that the number of industry operators has increased 3.7% on average annually to 127,548, many of which are non-employers. No single firm accounts for more than 5.0% of industry revenue.
IBISWorld estimates that revenue for the Credit Repair Services industry will grow over the five years to 2017. During that time, the industry is expected to experience more regulation as the Federal Trade Commission (FTC) cracks down on predatory service providers. Such crackdowns are not new, however. In 2008, the FTC teamed with 24 state agencies to root out a variety of offenses, including deceptive practices and charging advanced fees for services, both of which violate the Credit Repair Organizations Act. These crackdowns are expected to increase over the next five years and weigh on industry margins. For more information, visit IBISWorld’s Credit Repair Services report in the US industry page.
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IBISWorld industry Report Key Topics
This industry identifies errors in credit reporting and disputes inaccurate information with the appropriate organizations to improve credit ratings. These services are typically undertaken on behalf of a client who has known credit problems, such as a recent bankruptcy. This industry does not include non-profit firms that offer credit-counseling services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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