VantageScore CreditGauge™ December 2023: Consumer Credit Delinquencies Rise Again Across Nearly All VantageScore Credit Tiers

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Jan 29, 2024, 08:00 ET

Credit Card Balances and Utilization Rates Up Sharply Compared to December 2022
Overall Delinquencies Rise but Some Credit Products Showed Signs of Improvement
New Account Originations Remained Elevated for Both Credit Cards and Personal Loans

SAN FRANCISCO, Jan. 29, 2024 /PRNewswire/ -- Today VantageScore released its December 2023 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit. The average VantageScore 4.0 credit score dropped by 0.5 points but remained at 701. The lowest VantageScore 4.0 is 300, while the highest score is 850.

VantageScore CreditGauge - Credit Card Balance and Utilization Rate - December 2023

Through December 2023, the average U.S. consumer had significantly more credit card debt than a year ago. Credit card balances increased 8.2%. Nearly 50% of borrowers carried credit card balances from one month to the next despite APRs of 20% or higher. While inflation moderated and consumer spending remained strong in 2023, CreditGauge's four key products – auto loans, credit cards, personal loans, and mortgages – all reported higher delinquencies compared to December 2022. All VantageScore borrower tiers were impacted to some degree. VantageScore Subprime and VantageScore Nearprime showed the most weakness. The recent restart of student loan debt payments for millions of borrowers impacted consumer debt repayments in December 2023 and is expected to weigh on consumer finances to a far greater extent in 2024.

Key findings for December 2023 included:

CONSUMERS CONTINUED TO SPEND ON CREDIT CARDS – As 2023 came to an end, consumers continued to spend as balances rose 8.2% compared to December 2022. The credit utilization rate inched up 0.7% from 31.0% in December 2022 to 31.7% in December 2023. Holiday spending, higher interest rates, and higher prices all contributed to the growth in balances and utilization.

YEAR-OVER-YEAR OVERALL DELINQUENCIES ROSE ACROSS NEARLY EVERY VANTAGESCORE CREDIT TIER – In December, delinquencies were little changed compared to November 2023. However, compared to December 2022, delinquencies were higher across all credit products and Days Past Due (DPD) categories. Auto loan delinquencies rose 2.1%, the highest year-over-year increase in the 30-59 DPD category, while credit card delinquencies jumped the most in the 60-89 and 90-119 DPD categories on the year, increasing to 0.43% and 0.29%, respectively. Delinquency rates rose across all VantageScore credit tiers. The one exception was the VantageScore Prime borrower credit tier, where early-stage delinquencies improved slightly year-over-year.

NEW ACCOUNT ORIGINATIONS UP FOR CREDIT CARDS, PERSONAL LOANS – Credit card and personal loan originations continued their upward momentum in December, increasing 0.20% and 0.10% year-over-year, respectively. However, they remained below levels from December 2022. In December 2023, credit card originations rose across all age groups, with Gen X experiencing the highest increase compared to November 2023. High interest rates coupled with overall high credit quality meant lenders increased their lending in December 2023.

"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."

To view the full CreditGauge report, visit the VantageScore website.

About VantageScore CreditGauge™
CreditGauge is provided both as a monthly report to industry stakeholders as well as through a series of interactive tools at VantageScore.com. Stakeholders can use the tools to execute additional queries on credit metrics and compare current levels to a pre-pandemic timeframe, starting with January 2020. CreditGauge represents the views and opinions of VantageScore and does not necessarily reflect or represent the views of the Nationwide Credit Reporting Agencies (NCRAs)-- Equifax, Experian, and TransUnion.

VantageScore CreditGauge content, including any estimated economic forecasts, is intended for informational purposes only. VantageScore is not responsible for the use of the information contained in the CreditGauge report, including any assumptions or conclusions drawn from its use.

VantageScore CreditGauge is part of a suite of digital tools available on VantageScore.com, which also includes Inclusion360™, RiskRatio™, and MarketGain™.

About VantageScore®
Over 3,000 banks, fintechs, and other companies use VantageScore credit scores every day to assess consumer creditworthiness. Last year, over 19 billion VantageScore credit scores were used, representing a 30% yearly increase. Most top 10 US banks, large credit unions, and leading fintechs use VantageScore credit scores in one or more lines of business, including credit cards, auto loans, personal loans, and more.

VantageScore is an independently managed joint venture company of the three Nationwide Credit Reporting Agencies (NCRAs)-- Equifax, Experian, and TransUnion.

SOURCE VantageScore