VantageScore CreditGauge™ October 2023: Higher Year-Over-Year Credit Card Delinquencies and Balances Point Toward Modest Holiday Sales

• Credit Card Delinquencies Surpassed Levels Recorded in October 2022 Across All Days Past Due Categories
• New Account Originations Slowed Across All Products with the Largest Month-Over-Month Decrease in Credit Card Issuance Since January 2022; Gen Z Could Be Impacted Most

SAN FRANCISCO, Nov. 28, 2023 /PRNewswire/ -- Today, VantageScore released its October 2023 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit. After declining by one point earlier in the year, the average VantageScore credit score has held steady at 701 for the last four months. However, continuing increases in delinquencies will likely drive the average VantageScore credit score lower in the next few months.  Lower VantageScore credit scores will further reduce the willingness of lenders to make loans in an economy that is decelerating.   While credit health has stayed relatively strong throughout 2023, this month's CreditGauge showed that the nation's retailers could face a challenging holiday season as many consumers, particularly VantageScore Subprime and Nearprime segments, fell behind on credit card payments and have higher balances than a year ago.  CreditGauge insights also signal that lenders cut credit card issuance sharply this Fall, which may impact holiday sales.   Key findings for the month included:

ACROSS ALL CREDIT SEGMENTS, DELINQUENCY RATES REMAINED HIGHER THAN A YEAR AGO: Overall delinquency rates showed slight improvement month-over-month, as early-stage delinquencies slowed from 0.91% in September to 0.90% in October.  Year-over-year, however, delinquency rates across all segments were higher.  Credit card delinquencies saw a year-over-year uptick of 0.14% in the 60-89 Days Past Due (DPD) category, the highest increase among all products.  Credit card delinquencies surpassed levels recorded in October 2022 across all DPD categories and remained above pre-pandemic levels. Credit card delinquencies were concentrated among lower-scoring consumers, indicating that they were impacted the most due to economic pressures.

TOTAL AVERAGE BALANCES UP YEAR-OVER-YEAR WHILE UTILIZATION RATES REMAINED FLAT: In October, the average year-over-year balance for all credit products rose by $2,158 from $101,200 to just over $103,300 and inched up by $372 compared to the prior month.  Overall credit utilization remained relatively steady at 52.3%, indicating consumers continued to manage their credit well.

NEW CREDIT CARD ORIGINATIONS DIPPED HEADING INTO THE HOLIDAY SHOPPING SEASON: In October, there was a sharp decrease in credit card originations both year-over-year and month-over-month.  This month, new credit card originations were 3.09% compared to 3.35% in October 2022 and 3.55% in September 2023. Credit card originations fell the most month-over-month, declining by 0.46%, the largest single month-over-month decrease in credit card issuance since January 2022.  Lenders increased their credit requirements, and consumers remained cautious about spending. Originations fell most among Gen Z by 0.8% year-over-year and 0.9% month-over-month.

"Lenders reduced credit card originations in September and then again in October, which could dampen holiday shopping spirits this season," said Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore. "Although consumers seem to be managing their credit well overall, in general, they are carrying more debt and higher balances than a year ago.  Combined with tightened credit, retailer concerns around consumers' willingness to shop this holiday season seem justified."

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

About VantageScore CreditGauge™
CreditGauge is provided both as a monthly report to industry stakeholders as well as through a series of interactive tools at VantageScore.com. 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 represents the views and opinions of VantageScore and does not necessarily reflect or represent the views of the Nationwide Credit Reporting Agencies (NCRAs)-- Equifax, Experian, and TransUnion.

VantageScore CreditGauge content, including any estimated economic forecasts, is intended for informational purposes only. VantageScore is not responsible for the use of the information contained in the CreditGauge report, including any assumptions or conclusions drawn from its use.

VantageScore CreditGauge is part of a suite of digital tools available on VantageScore.com, which also includes Inclusion360™, RiskRatio™, and MarketGain™.

About VantageScore®
Over 3,000 banks, fintechs, and other companies use VantageScore credit scores every day to assess consumer creditworthiness. Last year, over 19 billion VantageScore credit scores were used, representing a 30% yearly increase. Most top 10 US banks, large credit unions, and leading fintechs use VantageScore credit scores in one or more lines of business, including credit cards, auto loans, personal loans, and more.

VantageScore is an independently managed joint venture company of the three Nationwide Credit Reporting Agencies (NCRAs)-- Equifax, Experian, and TransUnion.

SOURCE VantageScore