Nearly 12 million consumers gained access to credit products such as auto loans, credit cards and personal loans reaching new milestones in 2016. According to TransUnion’s Q4 2016 Industry Insights Report powered by PramaSM analytics, as the number of consumers with access to these products continued to grow, aggregate balances rose across all credit products by the year’s end. Three clear consumer credit trends in the report point to a healthy consumer credit market:
- Consumers have access to credit
- Consumers are using credit
- Consumer-level delinquencies are at low levels
Consumer credit activity was strong
Strong economic fundamentals in the U.S., including a positive employment picture and strong consumer confidence, resulted in higher consumer participation in credit markets, with the exception of residential lending. We ended the year with 193.5 million consumers holding some form of a revolving account, a 2.2% increase over 2015.
Strong economic fundamentals have led consumers to become more credit-active, outside of residential lending
Consumers used their credit more
With the exception of HELOC, average consumer debt levels rose in 2016. Based on consumer balance growth in personal loans of 3.8% and cards, 2.8% in bankcards and 3% in private label cards respectively, consumers increased their use of credit in 2016. This is supported by higher personal spending and greater consumer confidence.
Average debt levels have risen since 2015, except for HELOC
Consumers are managing their debt effectively
More importantly, consumers are also managing debt more effectively. The average revolving debt balance per consumer leveled-off after six years of de-leveraging.
Most consumers who carry balances have de-leveraged since 2010
Consumers are making payments on their obligations, which was reflected in lower consumer-level delinquency rates.
Consumer-level delinquency rates remain low
Subsequently, bankruptcy filings have dropped significantly since the recession, and were at a seven-year low in 2016.
Bankruptcy filings have declined significantly and continue to show improvement.