Consumer credit risk declines
After two straight quarters of increases, consumer credit risk reversed course and declined in the second quarter (Q2) of 2012, TransUnion said in a recent report.
According to TransUnion’s Credit Risk Index (CRI), credit risk decreased 1.57 percent quarter-over-quarter from the first quarter (Q1) of 2012 to Q2. CRI dropped from 123.98 to 122.03 in that time frames.
TransUnion’s CRI is “a measure of the risk inherent in the U.S. credit-using population,” and a lower index is indicative of lower levels of overall credit risk.
“After upticks in the prior two quarters, it was good to see the credit risk level decline this quarter to roughly the same level it was last year,” Charlie Wise, director of research and consulting in TransUnion’s financial services business unit, said in a statement.
More consumers paying on time
All major consumer loan types have seen quarter-over-quarter drops in delinquency rates for two straight quarters (Q1 and Q2 of 2012), TransUnion said. This improvement in delinquency rates includes credit cards, auto loans and mortgage loans.
“Delinquency rates for major loan types have all declined in the first half of 2012, and that contributed to the drop in the risk index in the second quarter,” Wise said.
In addition to the quarterly improvement, delinquency rates for either remained flat or decreased for all of those loan types on a yearly basis – from Q1 2011 to Q1 2012.
“Consumers are maintaining consistent payment behavior on their bankcards and auto loans, as well as on mortgages, which is the key reason why the U.S. Credit Risk Index has remained flat over the past year,” continued Wise.