VantageScore Says Top Credit Tiers See Biggest Increases in Late-Stage Delinquencies

Late-stage delinquency rates increased across all credit scores in July, compared to a year earlier, with the greatest percentage increases seen among the highest credit tiers, according to VantageScore.

The credit scoring company said in a Monday (Aug. 25) press release that the rate among consumers with a credit score between 661 and 780 increased 47% year over year, while that among those with a score between 781 and 850 leapt 109%.

Smaller increases were seen among consumers with credit scores of 300 to 600 and 601 to 660, according to the release.

Late-stage delinquencies are those that are between 90 and 119 days past due, per the release.

“Consumers in the highest VantageScore credit tiers are showing increased signs of credit stress on a year-over-year basis,” Susan Fahy, executive vice president and chief digital officer at VantageScore, said in the release.

VantageScore said in the Monday press release that the decrease in creditworthiness for the average consumer seen in July drove the average credit score down by one point compared to the previous month, to 701.

The company also reported that in secured lending, balances rose month over month while originations for auto loans decreased and those for mortgages were little changed.

“Balances are increasing for auto loans and mortgages, while new credit originations are down,” Fahy said in the release. “Sustained inflation for car and house prices is driving higher balances in these credit categories.”

Consumer credit reporting agency TransUnion reported Aug. 14 that it saw delinquencies continue to decline in the second quarter, with consumer-level delinquencies 90 or more days past due down by 9 basis points year over year.

That marked an improvement from previous years in which there had been year-over-year increases since 2021, TransUnion said in an Aug. 14 press release.

“We’re increasingly seeing the credit card lending market return to pre-pandemic patterns,” Jason Laky, executive vice president and head of financial services for TransUnion, said in the release. “Originations experienced their most significant year-over-year growth since 2022, while balance growth normalized to more historical levels. At the same time, delinquency rates declined, signaling that despite ongoing economic uncertainty, consumers continue to demonstrate resilience.”

The Federal Reserve Bank of New York reported in early August that serious delinquency rates, defined as debt that is 90 days or more past due, increased 65% year over year in the second quarter.

While that metric reads as an alarming one, the read-across is that 97% of debt is not in that troubled state, PYMNTS reported at the time.