Delinquency rates (90+ days) in Canada for credit cards inched up slightly in the second quarter. However, overall delinquency among all loans declined by more than 4%.
YapStone announced RentPayment, its online and mobile payment solution for the apartment rental industry, will now report rental payment information using TransUnion’s Resident Credit. The integration with ResidentCredit will offer a prompt, seamless reporting process for property managers and residents.
The credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) dropped on a yearly basis from 1.61% in Q4 2012 to 1.48% in Q4 2013. In a sign that consumers continue to deleverage, average credit card debt per borrower also declined from $5,376 in Q4 2012 to $5,325 in Q4 2013.
TransUnion released its annual forecasts on two primary consumer credit variables — mortgage and credit card delinquency rates. Credit card delinquency rates (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) are expected to rise nearly 10% from 1.51% in Q4 2013 to 1.66% in Q4 2014. Even with that increase, the card delinquency rate would remain far below average historical levels. Between 2007 and 2012, the credit card delinquency rate has averaged 2.38% during the fourth quarter.
Capital One Financial Corporation launched its Journey Credit Tracker interactive online credit education tool for “Journey Student Rewards” Credit Card customers. The customized tool powered by Credit Karma offers Journey cardholders free access to their monthly TransUnion credit score and profile in addition to a variety of tools to help them learn about credit. The Journey “Credit Tracker” web site offers students interactive tools that allow them to quickly and easily monitor their credit score and keep tabs on different credit factors impacting their score. Users can also compare their credit score to that of their peers by age or location, and the “Credit Simulator” lets users virtually simulate how certain financial choices will impact their credit score. Journey is designed to help college students build their credit with confidence and reward them for responsible credit use.
The national credit card delinquency rate was down for the sixth consecutive quarter, dropping to 0.6% at the end of the second quarter in 2011 to the lowest mark in 17 years. The 2Q/11 data shows credit card delinquency rates improving by more than at any other time since the recovery began in 2009, both on a quarter-over-quarter basis (-18.9%) and on a year-over-year basis (-34.8%). The analysis found that consumers made an estimated $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010, in contrast to five years prior when consumers made an estimated $2.1 billion more in purchases than payments for a nearly $75 billion turnaround in consumer payment dynamics from 2004 to 2009. TransUnion forecasts that credit card borrower delinquency rates will continue to drift downward for the remainder of 2011 as the economy continues its slow recovery and financial institutions maintain a conservative approach to underwriting, based on economic assumptions such as gross state product, consumer sentiment, disposable income, and interest rates.
TransUnion analysis found consumers made an estimated $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010. This is in contrast to the belief that charge-offs (where creditors write off debt that they deem is uncollectable as a loss) were the primary driver of lower credit card balances. Just five years prior to the TransUnion analysis, consumers had made an estimated $2.1 billion more in purchases than payments. That constitutes a nearly $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. Approximately 55% of consumers said they chose to use their debit card over their credit card more than half the time when making daily purchases. In fact, 47% of respondents said they did so more than three out of four times. Another 8% of respondents said they chose to use their debit card over credit card 51-75% of the time.
Consumers continue improving their financial situations in the economic recovery. The national credit card delinquency rate was down to 0.82% in 4Q/10 by almost 32% since the year ago period, but down only 1.2% since last quarter.
Credit Card Chargeoffs for January, meanwhile, marked the fourth straight month-over-month improvement, down 62 basis points to 8.37%, down 18% since the year ago period to a two-year low. Meanwhile, late stage delinquencies fell to a 27-month low for what is sure to be continued loss improvement in the coming months as the 60+ day delinquency index decreased 14 bps to 3.23% and 30+ day delinquencies dropped 36 bps to 4.18%.
This, according to Fitch’s Prime Credit Card Index, also shows gross yield improved for the second consecutive month to 21.98%, a 15 bps gain and remains 18% higher than the historical average at inception of 18.67%. The incidence of credit card delinquency was highest in Nevada (1.27%), according to TransUnion, which also showed Mississippi had a delinquency rate 1.13 percent and Florida had an average of 1.07%, the second and third highest in the country, respectively. The lowest credit card delinquency rates were found in North Dakota (0.45%), Alaska (0.54%) and South Dakota (0.55% National average credit card borrower debt (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) remained flat in the fourth quarter, increasing by only one dollar to $4,965 from the previous quarter’s $4,964. On a year-over-year basis, average cardholder debt was down 8.62%
(Cardflash Library, 2011-2-3).
Credit trends show total debt per consumer (excluding mortgage) for the nation increased to $25,709 in the fourth quarter of 2010, up 2.2% from the $25,163 figure in 3Q/10. Though total debt generally rises in the fourth quarter because of holiday shopping, among other things, TransUnion found that credit card debt actually declined nearly 3% during this period as lines of credit, revolving loans and installment loans increased. The total active credit population in Canada is 24.91 million consumers, up from 24.85 million consumers at the end of 2009, for whom credit card borrower debt declined to $3,688 in the quarter after two straight quarterly increases. Credit card debt is down 2.7 percent compared to the fourth quarter of 2009 ($3,790). Meanwhile, the national credit card delinquency rate (the ratio of credit card accounts 90 days or more delinquent) increased to 0.36%, up 5.9% over the previous quarter, but is down 7.7 percent from 0.39 percent since 4Q/09.
FICO credit scoring and TransUnion credit and information management have launched their new service offering a highly predictive general risk score. Indicating customers will receive three-to-five times the incremental improvement in risk prediction typically generated by an enhanced scoring model, the service will be available for full implementation in March 2011. Over the preceding two decades, FICO and TransUnion have partnered to deliver a unique combination of powerful analytics, agile service infrastructure and robust data to an extensive customer base in Canada, which includes leading national, regional and international lenders. Canadian credit grantors use FICO® Scores across the entire credit lifecycle, from booking new accounts to managing current customers.
Credit scores hit an average 665 in November, down one point from the month prior and down four points from January 2010. This is due to average credit card debt of $7,336; $173,566 in home mortgage loans; $49,908 in home equity; $15,147 in auto loans; and $28,617 in student loans. However, credit card debt amongst consumers with a credit card was down 7% since January 2010, according to the CreditKarma.com “U.S. Credit Score Climate Report.” Consumers in 14 states paid down their credit card balances by more than the national average since January 2010, which includes Arkansas, Connecticut, Michigan and Kansas by 8%; California, Oklahoma, New Hampshire and Indiana by 9%; Oregon, Tennessee and Utah by 11%; Colorado and Nevada by 13% and Wisconsin by 31%. Meanwhile, Alabama, Arkansas, Kentucky, Louisiana, Oklahoma, South Carolina and Tennessee have an average of fair to poor credit scores of 650 or lower; Massachusetts has the highest credit scores nationally of 684; and Alabama and Arkansas have the lowest credit scores, both averaging 641. This comes at time TransUnion’s proprietary Credit Risk Index (CRI) declined for the third consecutive quarter by 0.9% in 3Q/10 and now stands at 126.79. The CRI dropped 87 basis points (from 127.66), pushing down consumer risk to a risk level not witnessed in the U.S. since 1Q/09 thanks mostly to fewer borrowers delinquent on one or more accounts and lower outstanding debt. This, coupled with a 6.5% increase quarterly compounded demand for credit, suggests consumer credit activity will be stronger in terms of quality and volume. The indicator is 1.9% lower than in the year ago period, with 43 states and the District of Columbia having experienced declines in their respective credit risk indices. This is also in addition to earlier findings Indiana and Tennessee credit debt was down by 10%; Oregon by 11%; Nevada by 12%; Hawaii and Idaho by 13%; and Wisconsin credit card debt dropped by 28% back in September for a national credit score average of 666, down three points since January, when Massachusetts and New Jersey had the highest credit scores nationally with an average of 684(CardFlash Library, 2010/11/10, 2010/11/17).
2010 CREDIT SCORES
The national credit card delinquency rate is down 0.83% in 3Q/10, down nearly 9.8% since 2Q/10 and down 24.6% since the year ago period. TransUnion’s analysis estimates that more than eight million consumers stopped actively using bank-issued, general purpose credit cards over the past year thanks to charge-offs in the higher risk segments of the population, more conservative spending in the low-risk segments, and significant efforts by consumers across the board to maintain the health of their credit card relationships as a financial cushion. Credit card delinquency was highest in Nevada at 1.28%, followed by Florida at 1.09% and Mississippi with 1.06%. Meanwhile, according to TransUnion analysis, also shows the lowest credit card delinquency rates were found in North Dakota with 0.48%, South Dakota with 0.53% and Nebraska at 0.56%. Credit card delinquency was up in the District of Columbia by 19.67% and Mississippi with a 1.92% increase while Alaska (-19.2 percent) and Nebraska (-17.6 percent) saw the largest quarter-over-quarter drop in delinquency. The national average credit card borrower debt edged upward for the first time in six quarters by 0.28% to $4,964 from the previous quarter’s $4,951, but down 11.54% compared to the third quarter of 2009 ($5,612).