Rising Credit Delinquencies Among Higher-Income Consumers - October 2024 Analysis

VantageScore CreditGauge™ October 2024: Economic Stress Seen in High-Income Consumers

In the latest CreditGauge report from VantageScore, released for October 2024, a troubling trend is emerging among higher-income groups, particularly those earning above $150,000. The analysis reveals a significant uptick in credit delinquencies, marking a shift from the traditional view that only low-income consumers face such challenges.

Key Findings

Increased Debt Stress for Affluent Consumers

The report underlines that high-income earners are increasingly succumbing to financial pressures, evidenced by a staggering over 100% increase in the number of credit delinquencies categorized as 60 to 89 days past due since January 2023. This jump surpasses the growth rates experienced by middle-income earners, which stands at 63%, and low-income households, at 25%. Leading VantageScore officials, including Executive Vice President Susan Fahy, emphasize that even those in stable employment are feeling the weight of inflation and a tightening job market.

Declining Credit Accounts Across the Board

Another alarming observation in the October report is the decline in newly opened credit accounts across all major categories. Comparisons with September 2024 demonstrate this downward trend with credit card, personal loans, and auto loans all suffering significant month-over-month decreases. Among them, new credit cards saw the largest drop by 0.25%, reflecting a nationwide pause on account openings as consumers brace for the economic uncertainties ahead of the U.S.-especially amid the forthcoming National elections.

Card Balances Steady; But Mortgages Hit New Highs

Interestingly, credit card balances maintained stability at $6,335 despite the overall credit balances climbing to a record high of $105,600. This growth in total credit is largely attributed to mortgages, which rose sharply due to increased home prices and interest rates. Year-over-year growth indicates that mortgage balances are up by approximately 2.6%, equating to an average increase of $6,813. Meanwhile, credit use remained steady at 51.7%, highlighting cautious consumer behavior.

Implications for the Holiday Season

The economic climate, compounded by these findings, suggests a potentially subdued holiday shopping season as consumers reconsider their spending habits. Many are likely to prioritize debt payment over holiday consumption, especially as they navigate the uncertain job landscape and economic shifts. VantageScore's insights point to a need for consumers to rethink their financial strategies in light of these emerging trends.

Conclusion

VantageScore's CreditGauge serves as a vital tool in understanding the evolving landscape of consumer credit in America. As our economic environment shifts, awareness and proactive measures will be essential for individuals, especially those in higher income brackets grappling with the reality of increased financial strain. The complete report can be accessed at VantageScore's official website, providing further insights and data tools for stakeholders involved in the credit landscape. This serves as a reminder that financial health is a shared concern across all demographics, making it imperative to address these challenges collectively.