More consumers continue to fall behind on their debt payments and are likely going to be in that situation for a while because of the amount of debt they are carrying from month-to-month, according to data released last week by VantageScore. More consumers are seeing their credit scores drop and are falling from being considered prime borrowers to subprime, the company said.
By The Numbers: Looking at the three major stages of delinquency — accounts that are 30-to-59 days past due, accounts that are 60-to-89 days past due, and accounts that are between 90 and 119 days past due — rates were up across the board in January, according to VantageScore. While still not as high as they were before the COVID-19 pandemic, it seems as thought it’s a matter of when, not if, those pre-pandemic delinquency rates will be surpassed. “Borrowers across all credit products demonstrated a higher level of economic stress in January, in part a result of sustained inflation and moderately worsening employment levels,” VantageScore said.
- The overall average balance for consumers was $104,622 in January, which is a record high, according to VantageScore.
- Interestingly enough, while there was a 1% drop in the number of prime consumers, 0.7% of those consumers went up the credit spectrum to become SuperPrime, while 0.3% fell out of the Prime category and into the Subprime category. Consumers with higher credit scores are still easily able to make their debt payments while more of those at the lower end are having problems doing so.
The Last Word: “Consumers are struggling with higher credit balances and falling behind on paying their bills, in part due to sustained inflation,” said Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore. “With the Fed indicating that they are unlikely to cut rates soon, both lenders and consumers will need to remain vigilant in managing credit levels.”
