People with lower credit scores are driving the rise in delinquencies, but they aren’t the only ones struggling to pay debts on time.
Americans’ past-due bills are stacking up, and their newly-delinquent debts saw a marked increase in September.
Consumers’ average credit score remained at 701 for the third straight month, VantageScore researchers said, which is considered a “prime” score on a scale of 300 and 850. Meanwhile, credit-utilization rates eased slightly in September, showing most people “managing their credit health,” the report said.
“If this trend continues, we expect to see the later-stage delinquencies rise as well,” Fahy said. “With the holiday shopping season approaching, consumers should ensure that they are not accumulating more debt if they cannot pay it on time. This includes avoiding taking out new credit even if holiday retailers are offering discounts in exchange for opening a new account.”
Of course, it’s important to take a step back when measuring trends on debt. Delinquency numbers may be going in the wrong direction, but that’s after they took a dive during the pandemic when extra cash, lower inflation and lower interest rates helped many people clear out debts. The consumers who are driving the delinquency trend have subprime credit scores of 300 – 600 and near-prime scores from 601 to 660, Fahy noted.
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