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US Consumer Credit Diverges: Wealthier Recover, Poorer Struggle
18 Dec
Summary
- Higher-income households show improving delinquency rates since July.
- Lower-income households face persistently high delinquency rates.
- Auto loans and student loans exhibit near-crisis high delinquency rates.
Consumer credit health in the United States is showing divergent trends across income levels. Data from Vantage Score indicates that higher-income households (earning $150,000+) have seen their delinquency rates stabilize and decrease since July, a welcome shift after months of increases.
This improvement among wealthier Americans is attributed to better income growth and potential access to equity. However, lower-income households continue to face significant financial challenges, with delinquency rates remaining stubbornly high at 7-9%. This persistent increase contrasts with the stabilizing or decreasing rates seen in middle and higher-income brackets.
Across various loan types, the situation is concerning. Delinquency rates for auto loans and student loans, which resumed payments recently, are at historic highs, nearing levels seen just after the last financial crisis. Credit card and personal loan delinquencies are also elevated, though mortgage-related debt remains lower.
