The latest CreditGauge report by VantageScore reveals shifts across the U.S. consumer credit landscape, with credit card and student loan debt, delinquencies and more steadily increasing.
02/12/2024 9:40 A.M.
2 minute read
VantageScore recently released its December 2023 CreditGauge report, revealing that average credit card balances increased by a significant 8.2% compared to December 2022, underscoring a robust spending pattern that persisted through the end of 2023. Factors contributing to this uptick include holiday spending, higher interest rates, and the broader impact of inflation on consumer prices.
Additionally, the report found almost half of borrowers continued to carry credit card balances from one month to the next, even in the face of APRs exceeding 20%.
The CreditGauge report also sheds light on the performance of four key credit products: auto loans, credit cards, personal loans, and mortgages. All of these categories reported higher delinquencies in December 2023 compared to the same period in 2022. The increase in delinquencies spanned across all VantageScore credit tiers, with the subprime and nearprime tiers experiencing the most significant impact.
The resumption of student loan debt payments for millions of borrowers in December 2023 was identified as a factor contributing to the challenges in consumer debt repayments. The report suggests that this burden is expected to cast a more substantial shadow on consumer finances in 2024.
“As we begin a new year, the VantageScore monthly CreditGauge data points to weakening consumer finances, marked by higher delinquencies across many product and borrower segments,” said Susan Fahy, executive vice president and chief digital officer at VantageScore. “What is less clear today is whether lenders will reduce their lending to a consumer that is credit healthy overall but showing modestly increasing signs of economic stress.”
The report also found that credit card balances rose, and the credit usage rate increased from 31% in December 2022 to 31.7% in December 2023.
Delinquencies, a key metric in assessing the health of consumer credit, rose as well across nearly every VantageScore credit tier. Auto loan delinquencies saw the highest year-over-year increase in the 30-59 Days Past Due (DPD) category, while credit card delinquencies surged in the 60-89 and 90-119 DPD categories. The exception was the VantageScore prime borrower credit tier, where early-stage delinquencies showed a slight improvement year-over-year.
Conversely, new account originations for credit cards and personal loans increased slightly in December 2023, signaling a continuation of the upward momentum observed throughout the year. However, these originations remained below the levels recorded in December 2022.