Lenders offer credit cards to more subprime borrowers, but delinquencies remain low

Date: June 25, 2020

Lenders are issuing more credit cards to subprime borrowers (consumers with VantageScore® 3.0 credit scores lower than 601), but delinquency rates remain low, according to the latest TransUnion Industry Insights Report.

The credit card delinquency rate—the portion of borrowers 90 days or more delinquent on general-purpose credit cards—was 1.19 percent in the second quarter of 2015, according to the report. The figure was relatively unchanged from the same period in 2014, when the delinquency rate was 1.17 percent.

Even as the number of new accounts in the subprime credit tier grew, the average spending limit on subprime consumers’ new accounts declined in Q2 2015, TransUnion reported. The average new credit line for subprime borrowers fell to $923, the lowest amount since Q2 2012, when average new account lines fell to $896.

“Subprime consumers continue to gain access to credit, but lenders have scaled back the average new credit line for this group,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. “Distribution of originations across risk tiers has remained relatively steady in the past year, indicating that lenders are deliberate and approaching subprime originations cautiously.”

Issuers reported to TransUnion that 160.17 million consumers had credit cards in Q2 2015, a year-over-year increase of 6.8 million from the 154.2 million reported in Q2 2014.

The number of consumers under age 30 with credit card balances rose to 20.73 million in Q2 2015, an 8.6% increase over the 19.09 million recorded in Q2 2014.

The delinquency rate for the under-30 group in Q2 2015 was 1.80%. Average balances for the under-30 group rose slightly, from $2,135 in Q2 2014 to $2,154 in Q2 2015.

“From Q2 2014 to Q2 2015, 1.6 million more consumers under age 30 had a credit card balance, which demonstrates this group’s appetite for credit,” said Siegfried. “The under-30 age group had the largest increase of any age group, yet average balances have remained steady year over year. We’re observing consistent credit management skills from this group.”

Thirteen states experienced declines in their delinquency rates, with the largest reductions seen in Alaska (down 10.1% from 1.19% in Q2 2014 to 1.07% in Q2 2015); Washington (down 4.1% from 0.87% in Q2 2014 to 0.83% in Q2 2015); and New Hampshire (down 1.02% in Q2 2014 to 0.99% in Q2 2015).

Additional findings are summarized in the tables below. All information is reported by TransUnion as part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Q2 2015 Credit Card Statistics – Consumer-Level Delinquency Rates

Quarter over QuarterQ1 2015Q2 2015Pct. Change
USA1.37%1.19%(13.1%)
Year over YearQ2 2014Q2 2015Pct. Change
USA1.17%1.19%1.7%
Credit Card Consumer Delinquency Rates for Select StatesQ2 2015
California1.14%
Florida1.39%
Illinois1.03%
New York1.25%
Texas1.36%
Largest Year-over-Year DeclinesQ2 2014Q2 2015Pct. Change
Alaska1.19%1.07%(10.1%)
Washington0.87%0.83%(4.1%)
New Hampshire1.02%0.99%(3.7%)
Largest Year-over-Year IncreaseQ2 2014Q2 2015Pct. Change
North Dakota0.65%0.73%12.2%
Oklahoma1.22%1.37%11.9%
Mississippi1.68%1.85%10.3%

Q2 2015 Credit Card Statistics – Credit Card Debt per Borrower

Quarter over QuarterQ1 2015Q2 2015Pct. Change
USA$5,142$5,199(1.1%)
Year over YearQ2 2014Q2 201Pct. Change
USA$5,234$5,199(0.7%)
Credit Card Debt per Borrower for Select StatesQ2 2015
California$5,236
Florida$5,182
Illinois$5,226
New York$5,397
Texas$5,416
Largest Year-over-Year DeclinesQ2 2014Q2 2015Pct. Change
Colorado$5,663$5,541(2.2%)
Georgia$5,548$5,473(1.3%)
Michigan$4,774$4,712(1.3%)
Largest Year-over-Year IncreasesQ2 2014Q2 2015Pct. Change
North Dakota$4,283$4,3220.9%
Hawaii$5,539$5,5790.7%
South Dakota$4,578$4,5900.3%