ATLANTA (5/6/11)--The U.S. credit market is stabilizing and growing, and the nation's average credit score is increasing, according to Equifax's monthly National Credit Trends Report for March. That means delinquency rates are improving across the board, and more people will meet eligibility requirements for loans, said Equifax in a press release (PRNewswire
May 4). That--and Equifax's finding that auto loans are up 23% over last year--would be good news for credit unions, whose members have slowed borrowing as they pay off debt. Auto loans traditionally have been bread-and-butter loans for credit unions. During the recession, however, mortgage lending and refinancing took on heavier portions of credit unions' loan portfolios. In addition to the auto loan increase, sustained new growth is underway in these markets having year-over-year increases in the number of loans: loans for bankcards are up 14%; consumer finance, up 5%; and home equity lines of credit, up 9%, said the business credit intelligence company. "Across multiple loan products, we are clearly seeing indicators of sustained credit growth--most notably within automobile finance and bankcard originations," said Michael Koukounas, senior vice president-special client services for Equifax. "Consumer behavior is now fueling much of this improved loan performance as borrowers are more aggressively paying off their outstanding debts, which is positively impacting their credit risk scores and making them more attractive to lenders. If this trend continues, I would expect to see a further loosening of available credit," Koukounas said. Consumers continue to more consistently pay credit bills on time while simultaneously paying down existing debit, resulting in an increase in the average credit risk score nationally, said the company. "Although credit available today represents about half of pre-recession levels in 2006, it is steadily increasing, with 2010 levels exceeding 2009," said Equifax. That trend is expected to continue for this year. Month-to-date new credit for 2011 totaled $51 billion--13% more than the $45 billion for the same period in 2010. Other findings:
* Auto loans: Average loan amounts generated through captive finance companies were up 88% over 2009 levels; * First mortgages: Prime originations (with Equifax risk scores of 700 or more) represented more than 75% of all first mortgage originations; * Consumer loans: Installment loans accounted for 33.9% of total consumer loans, a five-year high; * Bankcards: The number of new bankcards issued increased more than 14% over 2010 levels; * Retail card: Retail card originations notably increased for non-prime consumers (having Equifax risk scores less than 660); * Home equity: Data indicated a considerable shift toward prime borrowers--those with the lowest risk scores; and * Student loans: The average student loan amount declined in response to regulatory changes, but data indicate students are seeking supplemental credit to finance education.