For the sixth straight quarter the TransUnion proprietary “Credit Risk Index” (CRI) dropped in 2Q/11. The 2Q/11 CRI was down 1.9% to 121.22 by 234-basis points from 123.56 in the year ago period as consumers continue to pay down their outstanding debt and avoid delinquency. Except for Massachusetts and Vermont, every state experienced at least a 0.76% decline in their credit risk while the quarterly decrease at the national level was the largest decline since the first quarter of 2007 for the best improvement since 3Q/08.
Consumers made an estimated $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010, defenestrating any theory charge-offs were driving lower credit card balances. This compares to five years ago when consumers had made an estimated $2.1 billion more in purchases than payments for nearly a $75 billion turnaround in consumer payment dynamics from 2004 to 2009. On a per-borrower basis between Q1 2009 and Q1 2010, average credit card debt in the U.S. declined more than $600 from $5,776 to $5,165. As of the first quarter of 2011, average credit card debt per borrower stood at $4,679, representing a 10-year low.
The CRI now stands 5.04% lower than it did at the end of the 2Q/10, having dropped 845 basis points by 6.5% since its 4Q/09 if peak of 129.67. Meanwhile, the TransUnion “Total Inquiry Index,” measuring consumer credit demand based on consumer-initiated credit inquiries levels observed in 2000 increased to 68.93 in the 2Q/11. Although the demand for credit remains low when compared to 2000 benchmark levels, the annual increase in the TII during the second quarter of 2011 was 0.7 percent.