TransUnion’s Credit Card Delinquency Study

TransUnion, one of the three credit reporting agencies, analyzes their consumer database quarterly to determine how credit active consumers manage mortgages, credit cards and auto loans.  This analysis is called the “TransUnion Trend Data”; the latest study was from third quarter 2011 (Q3 2011).  Credit card delinquencies and the average credit card balance increased from the prior quarter, while delinquencies and debt decreased from a year ago.

Delinquency rate

The national credit card delinquency rate (more than 90 days past due) was .71 percent in Q3 2011, compared to .6 percent in Q2 2011 or an 18.3 percent increase. This was the first increase since fourth quarter 2009.  The Q3 2011 delinquency rate was a decrease of 14.46 percent from the .83 percent rate a year ago.

Debt

The average credit card debt per borrower was $4,762 in Q3 2011; compared to $4,699 in Q2 2011 or a 1.36 percent increase.  This is still at near record lows.  The Q3 2011 average card debt decreased 4.07 percent from a year earlier, which was $4,964.

New accounts by score

In Q3 2010, 23 percent of new credit card accounts were from consumers with Vantage Scores below 700, which is below a “C”. VantageScores range from 501 to 990.  A year later, in Q3 2011, 25.2 percent had a score below 700, which was a 9.6 percent increase.  The proportion of new accounts with VantageScores of 800 and above dropped from 49.7 percent in Q3 2010 to 45.9 percent one year later.  Even though proportion by score range changed, the number of new credit accounts during that time frame stayed about the same.

State statistics

Between second and third quarters 2011, all fifty states including DC had increases in credit card delinquencies.  When the Metropolitan Statistical Areas (MSA) were evaluated, 89 percent had an increase, compared to only 17 percent in Q2 2011, and 26 percent in Q1 2011.

States with the highest credit card delinquencies in Q3 2011 (U.S. average is .71%):

Mississippi 1.03%

Nevada .98%

Alabama .93%

Arkansas .91%

States with the lowest credit card delinquencies in Q3 2011 (U.S. average is .71%):

North Dakota .42%

Alaska .45%

South Dakota .50%

Wisconsin .51%

States with the highest credit card debt in Q3 2011 (U.S. average is $4,762):

Alaska $6,980

North Carolina $5,464

Colorado $5,378

Georgia $5,308

States with the lowest credit card debt in Q3 2011 (U.S. average is $4,762):

Iowa $3,770

North Dakota $4,078

South Dakota $4,090

Wisconsin $4,156

The key reasons for the changes were that credit card issuers were targeting those with lower credit scores and delinquencies increased.  Obviously, the issuers loosened up their underwriting policies.

According to TransUnion, “Based on revised economic assumptions, TransUnion forecasts that credit card borrower delinquency rates could continue to drift upward in the short term. This forecast is based on various economic factors such as anticipated gross state product, consumer sentiment, disposable income, and interest rates. The forecast changes as the economy deviates from a conservative economic forecast or if there are unanticipated shocks to the economy affecting recovery.”

Credit Damage Expert, 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: Auto Loans, Bankruptcy, Credit Cards, Credit Report, Credit Score, Debt, Getting Credit, Money & Identity

This post was written by John Ulzheimer