Is Inflation Impacting Credit Scores?

June 28, 2022

VantageScore is an industry leader in predictive analytics and we keep a close eye on consumer credit health.

Overall credit scores have been very stable over the past few months. The average VantageScore 4.0 score as of May 2022 stands at 697, where it’s been since March. That said, it’s about 8 points higher compared to same month 2 years ago.

Average / Median VantageScore 4.0, January 2020 – May 2022

And delinquencies generally remain below pre-pandemic levels but are increasing year over year after bottoming out in Spring 2021

STORY TO WATCH: The story to watch remains that Gen-Z and Millennials show higher increases in card delinquencies on a year-over-year (Y-O-Y) basis, compared to other age groups. Credit card balances also went up by 30% and 22% for Gen Zs and Millennials on a Y-O-Y basis, compared to an 11% increase for the overall population.

SUBPRIME SHOWING DISTRESS: It’s not just younger borrowers that are showing signs of distress. Balances are significantly higher for subprime and near prime consumers compared to others. Low-income consumers saw a 24.8% increase in card balances on a Y-O-Y basis as well.

30-59 DPD Delinquency as % of Outstanding Balance: CREDIT CARD

Early credit card delinquencies are higher for younger age groups.

PERSONAL LOAN GROWTH: Personal loans continue to grow with higher percentage of consumers taking up new loans on a Y-O-Y basis. These are often issued by fintech lenders.

The data indicates the some consumers that tend to be more vulnerable to economic disruption are indeed having challenges paying their bills and may be using their credit cards to pay for goods and services that are more expensive than they were before.

Consumers that are concerned about their credit scores can visit a page on our website dedicated to providing tips for how to handle different credit situations.