VantageScore President and CEO Silvio Tavares joined anchors Romaine Bostick and Scarlet Fu on Bloomberg’s “The Close” to discuss the latest insights from VantageScore’s October 2024 CreditGauge.
If we look at the overall VantageScore credit score through the end of October, it was at 702. That’s a very healthy credit score and overall shows that the average consumer is quite healthy. But of course, there are a few areas of concern, and one of those areas is an increase in this sort of ‘inflation contagion’ hitting the more affluent consumer. That’s a surprise and an area of concern.
Beyond the “inflation contagion” trend impacting high-income consumers, Tavares highlighted that October 2024 CreditGauge insights also reflect increased caution from lenders as originations dropped across various products.
There’s a difference in what banks and consumers say they are going to do, and what they actually do. We saw in the most recent period that banks actually pulled back on lending across every major credit category – Auto Loans, Credit Cards, Mortgages. There was a lowering of growth and that tells you that banks are somewhat cautious entering this period of the year. I think it also makes it less likely that the Fed is going to decrease rates at its next meeting.
Tavares also underscored that credit card balances remain flat, indicating consumers may be approaching this holiday shopping season more cautiously than in previous years.
“The total average credit card balance was about $6,300 through the end of September, and it stayed the same through the end of October. What that tells you is consumers aren’t increasing their leverage very much,” added Tavares. “The reality is that we are going to have to watch. The value-conscious consumer might still see deals, so I’m not projecting a grinchy Christmas – I think in fact there will be some increase in spending – just not as high as we’ve seen in prior periods.”
CreditGauge is VantageScore’s monthly analysis of U.S. consumer credit health. Catch up on the latest CreditGauge insights here: https://www.vantagescore.com/lenders/credit-gauge/
Watch the interview here:
