Financial stress is spreading to some of the most creditworthy United States consumers, according to new data from VantageScore, raising concerns that household finances are weakening more broadly.
The credit scoring company reported on Monday that late repayments of more than 90 days surged 109% year-on-year among borrowers in the “superprime” category, those with the highest credit scores. Borrowers in the prime category, typically also considered financially secure, saw a 47% increase in late repayments over the same period.
Rikard Bandebo, chief economist at VantageScore, told Reuters that while the absolute level of delinquencies remains relatively low, the trend is troubling.
“Even though in absolute terms the increase is modest, it shows that even consumers considered the most credit-healthy are also beginning to see some stress with regard to repayments,” he said.
The data also showed a rise in late-stage delinquencies across auto loans and mortgages, sectors where defaults usually occur only under significant financial strain. Early-stage delinquencies, defined as payments overdue by 30 to 59 days, are accelerating fastest in these secured loan categories.
“Defaults on secured loans, such as mortgages, typically happen only when the pressure on finances is too much for the consumer to manage,” Bandebo said.
Prime customers are defined by VantageScore as having credit scores between 661 and 780, while superprime borrowers score between 781 and 850.
Alongside rising delinquencies, new originations for auto loans and mortgages fell in July, suggesting lenders and borrowers alike are growing more cautious.
Additionally, consumer sentiment weakened in August as households anticipated higher goods prices, with inflation concerns continuing to weigh heavily on spending.
