VantageScore CreditGauge™ July 2024: Consumers Demonstrate a New "Credit Caution" as Delinquencies Jumped and New Credit Growth Stalled

• New credit account growth declined across all products year-over-year 
  
  
• Consumer credit utilization decreased to 51.6% down from the prior month, hitting a new four-year low
  
  
• Early-stage credit delinquencies experienced their biggest month-over-month increase in more than four years

SAN FRANCISCO, Aug. 27, 2024 /PRNewswire/ -- VantageScore, a leading national credit-scoring company, today released its July 2024 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit. Through the end of July, both consumers and lenders shifted to a more cautious credit posture. While the average consumer remains credit healthy with an average VantageScore 4.0 credit score of 702, consumers overall became more credit cautious and reduced credit utilization to 51.6%, hitting a four-year low. Lenders also reduced new credit loan growth compared to July 2023 for all categories of credit products. Early-stage consumer credit delinquencies (30-59 Days Past Due) rose the most in more than four years as the weaker employment environment negatively impacted consumer payments on recent loans.

"Some new warning signs emerged in July, including higher delinquencies and lower originations. Both lenders and consumers are becoming more credit cautious as many consumers de-leveraged and reduced credit utilization," said Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore. "We are seeing the impact of sustained high interest rates, which are clearly cooling lending activity." 

Key insights for July 2024 CreditGauge include: 

CREDIT ORIGINATIONS DECLINED ACROSS ALL PRODUCTS — The percentage of newly opened credit accounts fell across all loan products in July 2024 compared to July 2023. Originations also fell compared to the prior month except for Mortgages, which remained flat. New Auto Loans decreased by 0.19%, the highest month-over-month decline among all products. New Auto Loan originations also fell among Gen Z consumers by 0.3% in July 2024 compared to June 2024, the biggest one-month drop across generation groups. The decrease in originations was driven by substantially more cautious borrowing by consumers and simultaneously increased risk perception by lenders.

OVERALL CREDIT UTILIZATION DECREASED — Overall loan balances and the amount of available credit used both fell in July 2024 compared to June 2024. Balances fell moderately by an average of $147 and the credit utilization rate dropped by 0.2% month-over-month to 51.6%. Credit utilization fell to a new four-year low.

LATE PAYMENTS ROSE BROADLY — Overall delinquencies in July 2024 rose across all DPD categories compared to both June 2024 and July 2023. In the 30-59 DPD category, Auto Loan delinquencies experienced the largest year-over-year increase, rising by 0.20% compared to July 2023, followed by Mortgage delinquencies, which increased by 0.17% over the same period. Delinquency rates rose year-over-year across all VantageScore credit tiers except Superprime. The broad-based increases in delinquencies reflected the deteriorating employment environment for consumers as many encountered more difficulty in remaining current on credit obligations. 

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.

SOURCE VantageScore