Study Finds 66% of Delinquent Child Support Payments Remain in Arrears 12 Months Later
New TransUnion analysis identifies three credit behaviors predictive of child support delinquencies
Two-thirds of delinquent child support payments remain in arrears 12 months after being reported delinquent, according to a new TransUnion (NYSE: TRU) public sector analysis. What’s more, 95% of accounts delinquent for 12 months will remain that way for at least three years.
The findings underscore the difficulty of recouping missed child support payments and the importance of early interventions. TransUnion’s report, “Predicting Child Support Payment Delinquencies,” identifies three key credit behavior trends that can provide an early warning to government agencies responsible for enforcing child support payments.
Agencies that leverage the insights found in our study can instead direct resources toward delinquency prevention, which is more cost effective for the state and helps ensure stability in the lives of children.
“Our study found that using traditional credit scores to assess noncustodial parents’ ability to pay are not very effective by themselves,” said Jeff Huth, senior vice president of TransUnion’s public sector business. “However, a more holistic approach helps uncover financial stress ahead of delinquency to better ensure children continue to receive the financial support they need.”
Researchers analyzed five years of TransUnion credit data from approximately 215,000 anonymized records. The report observed parents who had their missed child support payments reported to TransUnion for the first time to better pinpoint what precipitates nonpayment and what risk indicators are present in their credit files.
Credit scores offer an incomplete picture
While credit scores can provide directional guidance for risk of nonpayment, they leave a significant gap for predicting delinquency and can even be misleading when applied to assessing risk of missed child support payments. For example, many parents in TransUnion’s analysis saw their credit scores improve between the start of the study’s observation period to a month prior to their first missed child support payment.
Credit Score Distribution of Consumers in Study Population
Beginning of Observation Period
Month before first child support delinquency
Ratings based on VantageScore® 4.0 (Subprime = 300-600, Near Prime = 601-660, Prime = 661-720, Prime Plus = 721-780, Super Prime = 780+)
In addition, 35% of those who were delinquent had between a Near Prime and Super Prime credit score the month before their first delinquency. However, trended credit data revealed three primary, high-risk credit behavior segments predictive of future child support payment delinquency.
1) Expanding credit lines
More than two-thirds of the parents in the analysis opened a new credit trade within 12 months of their child support arrears being reported to TransUnion. For nearly 30% of parents, the gap between their most recent trade and first child support payment delinquency was 3 months or less.
2) Sharp increase in credit utilization
More than one-third (34.4%) of parents who defaulted on child support payments had 50% or higher credit utilization. Notably, half of that group utilized 75% or more of available revolving credit.
3) Reduced credit availability
Approximately three in 10 parents (29%) in the analysis had fewer revolving trades such as credit cards and other lines of credit at the time of a reported child support delinquency than at the start of the observation period.
Tailored and timely outreach
The findings illustrate the need for not only a more comprehensive approach to monitoring noncustodial parents’ financial situations, but for an individualized approach to proactive outreach that provides appropriate supports to help them remain current on child support payments.
“Once a parent falls behind on child support, it becomes increasingly less likely that they will recover, making enforcement after the fact a losing game,” said Greg Schlichter, director of research and consulting for TransUnion’s Public Sector business. “Agencies that leverage the insights found in our study can instead direct resources toward delinquency prevention, which is more cost effective for the state and helps ensure stability in the lives of children.”
For more information about the research, read “Predicting Child Support Payment Delinquencies.”
To facilitate the research, credit data was used to construct a longitudinal sample of reported “first-time” delinquent parents, which facilitated investigation into financial decision-making before and after a reported child support delinquency.
The anonymized study population consisted of approximately 215,000 parents who had a child support obligation established on or after January 1, 2017; had their first-ever child support delinquency reported on that obligation on or after January 1, 2020; and had one or more open credit trades as of December 31, 2019. In this context, “first” means the earliest time a delinquency appeared on a consumer’s TransUnion credit file.
For this group, TransUnion analyzed credit data between January 1, 2020, and June 30, 2022 (the “observation period”). This study only tracked delinquencies on major credit product types — auto loans, mortgages, credit cards, and personal loans — for trades open at any time during the observation period.
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