SAN JOSE–New data show the percentage of Americans with subprime credit scores declined to the lowest level in more than a decade.
According to data from Fair Isaac, the developer of the FICO score, the share of U.S. adults with credit scores that are considered “subprime” fell to 20.7% in April, the sixth consecutive year-over-year decline and the lowest level since at least 2005, which is when Fair Isaac first began tracking the data. Subprime borrowers peaked during the financial crisis at 25.5% in 2010.
Analysts have suggested that for financial institutions, the first product to benefit from the increased scores should be credit cards, followed by auto loans.
Subprime borrowers are generally defined as those with FICO credit scores from 300 to 599.
Recent Fed data indicated that debt-service payments accounted for 10.07% of households’ disposable personal income at the end of last year, down from a peak of 13.21% at the end of 2007.