SAN FRANCISCO —New data released by VantageScore, a national provider of credit-scoring and data analytics, show that in January delinquencies spiked to the highest level in nearly four years as some consumers dropped out of the VantageScore Prime credit tier into VantageScore Subprime due to inflation-induced economic stress.
The data was released as part of the company’s January 2024 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit.
According to the company, the average VantageScore 4.0 credit score remained at 701. The lowest VantageScore 4.0 credit score is 300, while the highest score is 850.
The Contrast
In contrast, the company said some consumers moved up from the VantageScore Prime credit tier to VantageScore Superprime, an “indication of two very different consumer segments.”
“Consumers with higher credit scores continued to do well, while those with lower credit scores faced growing economic pressures,” VantageScore reported. “Banks and lenders tightened new account originations for the first time in several months as credit quality concerns grew.”
The Key Findings
VantageScore said key findings for January 2024 CreditGauge data include:
Delinquencies Rose Across All Credit Segments
“Delinquencies climbed across all VantageScore credit tiers and products in January 2024 (Auto Loan, Credit Card, Mortgage, and Personal Loan),” the company said. “Overall early-stage delinquencies increased 0.9 points from 0.89% in December 2023 to 0.98% in January 2024. This was the second-largest monthly increase in the last four years to the highest level since February 2020.
“Delinquencies also rose compared to December 2023 in 60-89 DPD (Days Past Due) and 90-119 DPD categories,” the analysis continued. “In addition, overall balances reached a new high in January 2024 at $104,622, an increase of 1.8% year-over-year. Credit utilization dipped slightly (-0.1%) for the month. 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 Prime Credit Tier Shrank
According to VantageScore, in January there was a 1% decline in the VantageScore Prime credit tier as consumers migrated to both Superprime (+0.7%) and Subprime (+0.3%) tiers.
“The drop in the VantageScore Prime credit tier was due to very different economic experiences,” the company stated. “Year-over-year, consumers with higher credit scores continued to meet their debt obligations, which caused the Superprime population to increase. On the other hand, consumers with lower VantageScore credit scores remained stressed as the VantageScore Subprime credit tier grew.”
New Account Originations Slowed Across All Products
New account originations declined across all products in January 2024 compared to December 2023, Vantage Score reported, adding that new account originations also declined across all products year-over-year.
“Credit Card originations, after rising each month during the fourth quarter of 2023, from 3.09% to 3.53%, fell the most in January 2024 compared to December 2023, down 0.38%,” the company’s analysis said. “This reflected the seasonal lending pullback post-holidays. Auto loan and mortgage originations saw their fourth consecutive month of decline, with auto loans decreasing by 0.09% and mortgages by 0.03%.”
For the full report, go here.
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