New data out from TransUnion shows that consumers are doing a great job of bringing their finances back into good shape. For the sixth consecutive quarter, the credit card delinquency rate has dropped.
The number of consumers that were 90 days or more delinquent has now dropped to a 17 year low and credit card debt per borrower is hovering around near record low levels.
The data released today shows that credit card delinquencies are dropping at the fastest rate since the recession began. Year over year the delinquency rate has dropped almost 35%.
“National credit card delinquency rates have fallen to levels not seen since 1994 as consumers continue to tighten their spending,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “TransUnion believes that the recovering economy is only indirectly impacting delinquency rates. More important and impactful to the decline in bank card delinquency are that consumers are using credit cards more responsibly; a large number of delinquent accounts have moved to charge-off status; and lenders remain conservative in their underwriting.”
TransUnion forecasts that credit card borrower delinquency rates will continue to drift downward for the remainder of 2011 as the economy continues its slow recovery and financial institutions maintain a conservative approach to underwriting.
“Since the recession began, lenders have been increasingly scrutinizing the borrower’s overall financial situation, e.g. duration of employment, credit and income history — holding consumers to higher standards for loan approval,” added Becker. “Those approved are less likely to default even in the face of continued high unemployment levels.”
“Although there are still seasonal influences underlying credit card repayment patterns, they have been muted by the conservative use of credit by consumers. As the slow economic recovery continues, this trend should carry through the end of the year.”
For consumers this is good news, for debt relief providers it forecasts a possibly continued slowing demand for services.