Equifax Study on Consumer Credit Trends Shows Increased Credit Usage

Equifax, one of the three national consumer credit reporting agencies, conducts a monthly study on consumer credit trends.  The latest was conducted in April 2011 and released in June 2011.  According to Equifax, credit is becoming more stable and growing; write-offs have peaked; and more new accounts are being opened.  This is great news.

New credit has increased nearly 15% from April 2010 which represented $209 billion compared to $240 billion in April 2011. This is below the levels of over $400 billion in 2006 and 2007.  Lending has increased from a year ago in auto, bank, student loans and home equity revolving loans.  Delinquencies have peaked in most areas except home loans and student loans.  There are fewer delinquencies from loans issued since 2008 because of the tighter credit policies of financial institutions. More loans are being offered to consumers with scores below 600, which are classified as subprime.

The Highlights

• New auto loans increased almost 17% over April 2010, and 9% over March 2011.
• Auto finance companies issued 25% of new car loans to consumers with scores under 600; while banks issued 8% of them.
• New credit cards opened increased 80% over April 2010.
• New credit cards issued to consumers with scores under 600 increased 66% in a four month period (January to April) compared to the same period a year ago; it increased 63% from 2008 and 2009.
• Bankcard credit limits increased 27% over a four month period (January to April) compared to the same period a year ago.
• New bankcards issued to consumers with scores under 600 increased by 68% over one year ago.
• Consumer finance loans increased by 3.5% over April 2010 and 2% over March 2011.
• Consumer finance loans to consumers with scores under 600 increased by 2% over 2010 and 10% over 2006.
• Approximately 41% of consumer finance loans were subprime.

United States credit policy seems to be loosening up to consumers in auto, bankcards and consumer finance, including those with scores under 600.  If you are in need of credit, it may be easier to qualify for credit cards and car loans since 2008.  It doesn’t mean that you should seek credit unless you need it and can afford it.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Credit Score, Debt, Getting Credit, Money & Identity

This post was written by John Ulzheimer