The Credit Profile of Texas Consumers A study proposed by The Study Committee of The Texas Finance Commission

The State of the State Texas was one of five states to get an F in a new report ranking the assets and opportunities for families by CFED, a Washington, D.C., nonprofit that conducts economic research. Texas was one of five states to get an F in a new report ranking the assets and opportunities for families by CFED, a Washington, D.C., nonprofit that conducts economic research. Financial security: D. Financial security: D. Texas was 48th among states for average household net worth. Nearly one in five Texans has zero net worth. Only nine states reported lower ratios of people per savings accounts. Ft. Worth Star-Telegram 7/8/05 Texas was 48th among states for average household net worth. Nearly one in five Texans has zero net worth. Only nine states reported lower ratios of people per savings accounts. Ft. Worth Star-Telegram 7/8/05

The State of the State Texans have the worst credit score in the nation. Study by Experian reported by the DMN in Oct 03 Texans have the worst credit score in the nation. Study by Experian reported by the DMN in Oct 03 In April Texas had the highest foreclosure rate in the nation. April 2005 Monthly U.S. Foreclosure Market Report, RealtyTrac In April Texas had the highest foreclosure rate in the nation. April 2005 Monthly U.S. Foreclosure Market Report, RealtyTrac Texas has high rates of delinquency. Texas has high rates of delinquency. Texas has a high incidence of subprime lending. Texas has a high incidence of subprime lending.

The State of the State Collin County Dallas Morning News 8/14/05

The State of the Nation Household debt is at an all-time high at $10.7 trillion[1], Household debt is at an all-time high at $10.7 trillion[1],[1] personal savings are at zero[2], and personal savings are at zero[2], and[2] foreclosures and delinquencies are rising. foreclosures and delinquencies are rising. Credit card debt is high at $768 billion[3]. Credit card debt is high at $768 billion[3].[3] [1][1] Federal Reserve, Flow of Funds Accounts of the United States, Q4, 2004 [1] [2][2] Department of Commerce Bureau of Economic Analysis, personal saving rate was 0.0% of disposable income for June 2005 [2] [3][3] Federal Reserve Statistical Release: Amount of Revolving Consumer Credit Outstanding 2005, Q2 [3]

The State of the Nation Consumer debt is now equal to 110% of disposable income. Ten years ago it was 85%; just twenty years ago it was 65%[1]. Consumer debt is now equal to 110% of disposable income. Ten years ago it was 85%; just twenty years ago it was 65%[1].[1] The average American family spends $1.22 for every dollar it earns[2]. The average American family spends $1.22 for every dollar it earns[2].[2] The average family saw its credit card debt grow by 53% in the 1990s[3] The average family saw its credit card debt grow by 53% in the 1990s[3][3] As many as 25% of Hispanic households in the U.S. don't have bank accounts and neither do a quarter of all families with incomes under $20,000. Nearly half of the families moving from welfare to work dont have bank accounts either[4]. As many as 25% of Hispanic households in the U.S. don't have bank accounts and neither do a quarter of all families with incomes under $20,000. Nearly half of the families moving from welfare to work dont have bank accounts either[4].[4] [1][1] Daily Bankruptcy News [1] [2][2] From [2] [3][3] Demos, Borrowing to Make Ends Meet: The Growth of Credit Card Debt in the 90s; usa.org/demos/debt_assets usa.org/demos/debt_assets [3] usa.org/demos/debt_assets [4][4] Federal Reserve Board, Survey of Consumer Finances (1998), [4]

Proposed Study Scope Draft a narrative report that discusses the consumer demographics and economic indicators that affect the wealth and credit capacity of Texas consumers. Draft a narrative report that discusses the consumer demographics and economic indicators that affect the wealth and credit capacity of Texas consumers. Collect statistical data about the use of consumer credit and consumer demographics in Texas over the last 30 years. Collect statistical data about the use of consumer credit and consumer demographics in Texas over the last 30 years. Determine if significant variations exist by geographic area in the credit-worthiness of consumers. Determine if significant variations exist by geographic area in the credit-worthiness of consumers.

Proposed Study Scope Elements that the report should discuss: Elements that the report should discuss: Credit scores Credit scores Classification of types of lending Classification of types of lending Incidence rates of types of lending Incidence rates of types of lending Delinquency rates Delinquency rates Foreclosure rates Foreclosure rates Savings rates Savings rates Net worth of consumers Net worth of consumers Household income levels Household income levels Homeownership rates of consumers Homeownership rates of consumers

Proposed Study Scope What factors show the greatest significance in predicting a consumers credit score? What factors show the greatest significance in predicting a consumers credit score? To what extent are Texas consumers underrepresented in the traditional credit reporting database systems due to thin or no credit files? To what extent are Texas consumers underrepresented in the traditional credit reporting database systems due to thin or no credit files? To what extent does lack of financial skills impact a consumers credit score? To what extent does lack of financial skills impact a consumers credit score? What area of financial education could have the greatest impact on improving consumers credit scores? What area of financial education could have the greatest impact on improving consumers credit scores?

Funding An amount is included in the baseline of OCCCs appropriation that could be used for conducting studies, credit education opportunities, or regulatory activities. The maximum amount is $100,000. An amount is included in the baseline of OCCCs appropriation that could be used for conducting studies, credit education opportunities, or regulatory activities. The maximum amount is $100,000. No additional revenue is dedicated for the purpose of conducting studies. Any revenue would come from the fees paid by the regulated industries to the OCCC. No additional revenue is dedicated for the purpose of conducting studies. Any revenue would come from the fees paid by the regulated industries to the OCCC.

Research Restrictions An agency may not expend any funds … for research projects of any type until the agency has adopted and filed with the Legislative Budget Board a policy that clearly establishes and protects the property rights of the state with regard to any patentable product, process, or idea that might result from such research. General Appropriations Act, FY06-07, IX-37, Sec An agency may not expend any funds … for research projects of any type until the agency has adopted and filed with the Legislative Budget Board a policy that clearly establishes and protects the property rights of the state with regard to any patentable product, process, or idea that might result from such research. General Appropriations Act, FY06-07, IX-37, Sec Before expending funds that are appropriated by the Act for the purpose of contracting for a consultant or other private assistance in performing a study required by the Legislature that includes statistical or demographic analysis of data, the agency conducting the study shall determine if the resources of the Texas Legislative Council or the University of Texas at San Antonio are available to assist the agency in designing or conducting that component of the study. General Appropriations Act, FY 06-07, IX-44, Sec Before expending funds that are appropriated by the Act for the purpose of contracting for a consultant or other private assistance in performing a study required by the Legislature that includes statistical or demographic analysis of data, the agency conducting the study shall determine if the resources of the Texas Legislative Council or the University of Texas at San Antonio are available to assist the agency in designing or conducting that component of the study. General Appropriations Act, FY 06-07, IX-44, Sec