Credit card balances climbed 2.9% year-over-year, in line with annualized inflation, while overall credit utilization declined year-over-year
VantageScore, a leading national credit-scoring company, today released its December 2024 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit. The average VantageScore 4.0 credit score remained at 702. The lowest VantageScore 4.0 credit score is 300, while the highest score is 850. Delinquencies entered 2025 near their highest levels over the past five years across all Days-Past-Due (DPD) periods and across the lowest three VantageScore credit tiers. Credit Card balances were up 2.9%, the most in a year. However, much of the increase can be traced to inflation, and adjusted for inflation, card balances were flat. In a sign of renewed credit caution, overall consumer credit utilization dropped one full percentage point to 51.6%, the second-lowest credit utilization rate in 2024.
Consumer spending offers a mixed picture as we enter 2025,” said Susan Fahy, Executive Vice President and Chief Digital Officer at VantageScore. “Though consumers continued to spend in 2024, it was largely in line with the inflation rate, indicating they entered the new year leveraging their credit mostly for necessities. Delinquencies remain a concern as they sit near the highest levels since just before the pandemic and continued to worsen among the riskiest credit tiers, a sign that consumers are still feeling strained and are spending in moderation.
Key insights for December 2024 CreditGauge include:
CREDIT CARD BALANCES CLIMBED: Credit Card balances rose only 2.9% compared to December 2023, in line with the annual inflation rate of 2.9% for 2024. This indicates cautious credit usage by consumers looking to plug the hole in their wallets left by inflation and limiting spending on discretionary items.
OVERALL DELINQUENCIES GREW IN 2024: Late payments increased across all DPD periods in December 2024 compared to December 2023. Year-over-year, delinquencies rose across all VantageScore credit tiers except VantageScore Superprime (781-850). Throughout 2024, consumers faced several economic headwinds, including higher prices, rising interest rates, and a softening labor market. These challenges contributed to the overall rise in delinquencies.
OVERALL CREDIT BALANCES DECREASED YEAR-OVER-YEAR: Year-over-year, the balance-to-loan ratio decreased by 1.0% to 51.6% compared to December 2023. This indicates that although consumers still have available credit at their disposal, they are exercising restraint in using it. Overall credit balances also fell 0.9% or $952 in December 2024 compared to the month before. This decline was primarily driven by consumers paying down mortgage debt and refraining from purchasing new homes.
To view the full CreditGauge report, visit the VantageScore website.
