Greg Schlichter, Director, Research and Consulting, Public Sector
A recent TransUnion study found 95% of parents with six consecutive months of missing child support payments will continue to miss their obligations. The study also found enforcement agencies have a short window to effectively identify nonpayment risk before an account fall into arrears — typically less than three months.
With case managers and child support agencies already stretched thin, patterns of sustained nonpayment among many delinquent parents highlight increasing challenges in enforcing court-ordered child support, maintaining collections and reducing arrears.
It’s critical agency case managers identify struggling parents before payments are missed. The good news about alleviating these gaps is predicting child support nonpayment risk is possible.
Understand what warning signs exist
Child support agencies can use traditional credit reports to monitor debt and assess a noncustodial parent's ability to make child support payments at a point in time. Credit information that provides a snapshot in time can also help case managers prioritize collections for parents in arrears. When child support enforcement personnel pull this kind of credit information — known as a ‘soft inquiry’ — the credit score of the parent is not impacted.
Our analyses of child support accounts in arrears reported to TransUnion also identified leading indicators of future child support payment delinquency. We found trended credit data can help reveal a more holistic picture of nonpayment risk. By providing visibility into noncustodial parents’ payment patterns and behaviors over time, trended credit data demonstrated three primary, high-risk credit behaviors that indicate significantly more likelihood of near-term child support nonpayment:
Child support agencies can view and monitor trended credit information to better assess a noncustodial parent’s ability to make child support payments as financial situations change over time. In our analyses, trended credit data proved to be a more reliable tool for child support agencies and case managers for a few reasons:
Not every parent takes the same path to missed child support payments. Some parents’ financial profiles show earlier warning signs — often exhibiting credit behaviors an untrained eye may not see as risky. Agencies can improve child support order enforcement by building a data-driven approach based on trended credit data to manage risk and inform intervention efforts without impacting a parent’s credit score. This is a cornerstone of building a data-driven case management strategy that delivers the right interventions to the right parents at the right time based on their evolving financial situations.
To learn more about the methodology of our analyses and strategies for data-driven child support enforcement and risk intervention, download the TransUnion guide: Predicting Child Support Payment Delinquencies.
1 For example, a 36% total utilization rate means that for every $1 a parent had available in credit across all of their revolving accounts, they carried a $0.36 balance. It is not a trade-specific measure.
2 30% Credit Utilization Rule: Truth or Myth? – NerdWallet
3 New-to-credit consumers are those where the oldest trade on their credit file is 0-24 months old