VantageScore CreditGauge™ May 2024: The Credit Gap, Consumer Credit Diverged--Older and More Affluent Borrowers Continued to Spend and Pay on Time as Younger Consumers Increasingly Went Delinquent on Credit Cards

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Jun 27, 2024, 08:00 ET

Average Consumer Credit Health Remained Stable in May with a 702 VantageScore Credit Score; VantageScore Superprime and Subprime Segments Continued to Expand While the VantageScore Prime Segment Shrank
Overall Early-Stage Delinquencies Rose in May 2024 after Two Months of Sequential Declines; Mortgage Delinquencies Unexpectedly Climbed
Gen Z Credit Health Continued to be Impacted by Rising Rents, High Interest Rates and Growing Credit Balances

SAN FRANCISCO , June 27, 2024 /PRNewswire/ -- VantageScore, a leading national credit-scoring company, today released its May 2024 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit. The average VantageScore 4.0 credit score held steady at a healthy 702 for the third consecutive month. The lowest VantageScore 4.0 credit score is 300, while the highest score is 850. Gen Z consumers (born after 1997) and lower-income consumers experienced an uptick in credit card delinquencies, which rose in May 2024 compared to April 2024.

Gen Z Continues to Struggle with Credit Card Debt - May 2024 - VantageScore CreditGauge

"Among American consumers, the bifurcation in consumer credit health continued, as the younger and less affluent continued to be among the most impacted by continued inflation and high interest rates," said Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore. "In general, consumers are more disciplined with their finances in the first half of the year, coming off the high credit utilization holiday shopping season. That discipline started to fade in May as some consumers faced rising rents and competing priorities when it comes to meeting debt obligations."

Key insights for May 2024 CreditGauge include:

VANTAGESCORE SUBPRIME AND SUPERPRIME CREDIT TIERS CONTINUED TO EXPAND – VantageScore Superprime and Subprime credit tiers continued to expand year-over-year. During May 2024, VantageScore's Superprime credit tier increased by 0.7% to 31.2% and VantageScore's Subprime credit tier increased by 0.4% to 18.3% compared to May 2023, resulting in the VantageScore Prime credit tier continuing to shrink. In May 2024, the VantageScore Prime credit tier contracted to 33.1% compared to 34.0% in May 2023. Overall in May 2024, more consumers migrated to very good credit health while relatively fewer others moved into poor credit health. With these moves, the middle tier, VantageScore Prime, continued to be hollowed out.

EARLY-STAGE MORTGAGE DELINQUENCIES ROSE YEAR-OVER-YEAR; CREDIT CARD, AUTO LOAN LATE PAYMENTS ALSO INCREASED – Early-stage Mortgage loan delinquencies rose more than a quarter percentage point to a rate of 0.92% in May 2024 compared to May 2023. In May 2024, Credit Card delinquencies rose 0.09% to 0.69%. Auto Loans rose to 2.07%, an increase of 0.13% compared to May 2023.

GEN Z, LOW INCOME CREDIT CARD DELINQUENCIES ROSE – Credit payment delinquencies, average credit balances and credit utilization rates for Gen Z credit card holders all rose in May 2024 compared to April 2024. Delinquencies also rose for lower-income cardholders. The increased dependency on credit was the result of the persistent pressures of inflation, rising rental costs and elevated interest rates heading into the higher spending months of the summer.

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

About VantageScore CreditGauge™
CreditGauge is provided both as a monthly analysis to industry stakeholders as well as through a series of interactive tools at VantageScore.com, which also includes Inclusion360™, RiskRatio™, and MarketGain™. 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 solely represents the views and analysis of VantageScore and does not necessarily reflect or represent the views of the Nationwide Consumer Reporting Agencies (NCRAs) – Equifax, Experian, and TransUnion.

About VantageScore®
VantageScore is the fastest-growing credit scoring company in the U.S., and is known for the industry's most innovative, predictive, and inclusive credit score models. In 2023, usage of VantageScore increased by 42% to more than 27 billion credit scores. More than 3,400 institutions, including 8 of the top 10 banks, use VantageScore credit scores to provide consumer credit products including credit cards, auto loans, personal loans and mortgages. The VantageScore 4.0 credit scoring model scores 33 million more people than traditional models. With the FHFA mandating the use of VantageScore 4.0 for Fannie Mae and Freddie Mac guaranteed mortgages, the company is also ushering in a new era for mortgage lending and helping to close the homeownership gap.

VantageScore is an independently managed joint venture company and owners include the three Nationwide Consumer Reporting Agencies (NCRAs) – Equifax, Experian, and TransUnion.

SOURCE VantageScore