Consumers Paying Off More Debt in a Timelier Manner

August 31, 2011 (Shirley Allen)

American consumers continued to pay-off their outstanding debts and delinquency levels continued to improve in the second quarter of 2011 according to the Credit Risk Index (CRI) released by credit monitoring giant TransUnion.

The CRI declined 1.9 percent to 121.22 in the second quarter of 2011 from 123.56 in the first quarter of the year. It was the sixth consecutive quarter that credit risk levels have declined signaling a broad improvement in consumer credit conditions.

“The lengthy, broad and steady decline in the Credit Risk Index, which reflects declines in consumer delinquency and debt levels, has placed the consumer credit market on a firmer footing,” said Chet Wiermanski, global chief scientist at TransUnion. “This responsible use of credit has given some lenders confidence to ease lending standards and invest more in the acquisition of new credit customers.”

TransUnion says that increased lending activity among the banks and finance companies in the past several quarters are showing a healthier balance as consumers with new accounts with higher credit limits are posting lower utilization rates.

Forty-eight states and the District of Columbia experienced at least a 0.76 decline in their credit risk. The index has declined 6.5 percent since reaching its peak of 129.67 in the fourth quarter of 2009.

Mississippi (155.73), Nevada (154.72), and Texas (152.56) had the highest CRI while North Dakota (77.87), Minnesota (86.38), and Vermont (90.06) had the lowest CRI.

The national average for mortgage loans that were 60 days or more delinquent was 5.82 percent in the second quarter, down from 6.19 percent in the first quarter.

The national average for auto loans that were 60 days or more delinquent was 0.44 percent, down from 0.49 in the first quarter, and the national average for credit cards that were 90 days or more delinquent were 0.60 percent, down from 0.74 percent in the first quarter of 2011.

Credit inquiries increased 0.7 percent in the second quarter showing increased demand for consumer credit.

“Lenders are making new credit available to an increasing percentage of consumers, who in turn are conservative with their use of it,” said Wiermanski. “Continued responsible use and repayment of credit by consumers during the rest of 2011 should modestly improve the CRI to levels witnessed just prior to the early stages of the credit and mortgage crisis,” added Wiermanski.

Tags: TransUnion, credit risk, outstanding debt, delinquency rates, credit conditions, lending activity, banks, finance companies, mortgage loans, auto loans, credit cards

Source:
TransUnion