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Consumers are more confident managing their credit since recession Experian released the Q3 today featuring data that highlights consumer credit card debt has now reached its highest level since Q4 2009. Credit card debt levels reached $650 billion in Q3 2015, the highest it has been since Q4 2009 when it was $667 billion. Experian released the Q3 2015 Experian Market Intelligence Brief today featuring data that highlights consumer credit card debt has now reached its highest level since Q4 2009. Credit card debt levels reached $650 billion in Q3 2015, the highest it has been since Q4 2009 when it was $667 billion. Credit card delinquency rates on outstanding balances 60 or more days past due have decreased 71 percent during the same time period. Combining those indicators with the national unemployment rate dropping 50 percent during the same span illustrates a positive economic outlook on credit card trends among lenders and consumers. “Overall credit card limits have increased 102 percent since Q4 2009 with $82 billion originated in Q3 2015,” said Kelly Kent, vice president of Experian Decision Analytics. “The increase in limits from lenders and the steady climb in credit card debt combined with exceptional delinquency rates signals greater confidence among consumers as they are showing more assurance in managing their credit since the recession. We expect to see credit card debt increase in Q4 based on historical seasonal trends driven by the holiday shopping season especially with the early positive holiday sales as a sign.” The Q3 2015 Experian Market Intelligence Brief report is now available.  

Environmentally friendly, lower fuel costs and tax incentives. These are all words that describe alternative-powered vehicles, and serve as reasons why many car shoppers flocked to their local dealerships over the past several years with the intent of “going green” with their next vehicle. However, that trend seems to be fading into the past. As gas prices continue to trend downward, we have seen more and more consumers steer away from hybrids. In fact, according to Experian’s recent Automotive Market Trends and Registrations analysis, when it came to fuel type, hybrids only made up 2.5 percent of the vehicles registered in the third quarter of 2015. This was a 19.2 percent drop from a year ago. Meanwhile, gas-powered vehicles dominated the market at nearly 94 percent. Furthermore, the analysis found that the hybrid car was the vehicle segment that suffered the second largest year-over-year decrease in registrations and its second consecutive quarterly decline, reducing by 19 percent. Conversely, the upper premium sports car (including vehicle models, such as the Porsche 911, Jaguar XJ and BMW 6-Series) saw the highest percentage increase, growing by 45 percent over the same time period. From an overall market perspective, the analysis found that through the third quarter of 2015, new vehicle registrations increased by 5.5 percent from the previous year – a clear sign that the market continues to trend in a positive direction. As previous Experian analyses have indicated, as long as consumers continue to stay on top of their monthly payments, the boom in new vehicle sales will be a positive sign for the industry. The analysis also examined the demographic characteristics of the new vehicle buyer, and found that nearly 50 percent of the new vehicle purchasing power in the U.S. falls to consumers between the ages of 40-69. What’s more, individuals with incomes from $50,000-$100,000 made up 35.5 percent of all new vehicle buyers. Like many things in life, the automotive market is ever changing. At one moment, a segment of vehicles could be selling like hot cakes, and the next moment suffer a steep decline in sales. Gaining insight into these types of trends enables manufacturers and retailers to better understand the fluctuations in the market, and more easily position their businesses for success. And the better positioned they are for success, the more “green” these companies will see.      

By all accounts, the national housing market in the US stabilized with a recent report showing year-over-year growth at 6.8 percent for October 2015. However, while interest rates remain near all-time lows, it’s estimated that millions of Americans are unable to take advantage of this opportunity because they are unscoreable using the current credit score model mandated by Fannie Mae and Freddie Mac (“the GSEs”). Under their current guidelines, the GSEs require mortgage lenders to use an older version of a consumer’s FICO credit score when assessing their credit risk. This model is based on data from 1995 to 2000 and unnecessarily excludes millions of qualified borrowers. For instance, VantageScore 3.0 allows for the scoring of 30–35 million more people that are currently un-scoreable under the legacy credit score model. For example, VantageScore expands the depth and breadth of data collected to allow for more creditworthy consumers while balancing risk.  It would allow for more consumers to be scored without lowering credit standards.  With the demonstrated ability of non-legacy models to score more consumers, more consumers would also be eligible for the Home Affordable Modification Program (HAMP) program being conducted by the GSEs. In addition to limiting innovation that could help boost consumer access to credit, the continued reliance on a single credit score model by the GSEs presents substantial risks to industry, their regulators, consumers and the economy as a whole. Using newer credit score models like VantageScore 3.0 would provide for greater predictability given the expanded data available. It would reduce the both the operational and credit risk of the GSEs. Congress can help to address this imbalance by passing H.R. 4211, the Credit Score Competition Act of 2015, which was introduced on December 10 by Representatives Ed Royce (R-CA) and Terri Sewell (D-GA). The bill would instruct Fannie Mae and Freddie Mac to update their requirements so that lenders might be able to use other credit scoring models that are empirically derived and both demonstrably and statistically sound. Experian encourages lawmakers to pass this bill to help encourage the use of innovative and inclusive credit scoring models, while also helping to reduce exposure to potential operational and credit risk.