During our December 7 Market Pulse webinar, experts shared insights, empowering you to look back at the economic and consumer landscape of 2023 and focus on forward by presenting an economic and consumer credit outlook for 2024. Our Equifax Risk Advisory team below answers your questions we were unable to answer during the webinar. 

What's your point of view on page 27's left chart? The steepness of the bankcard credit limits shows no slowing in October 2023. That's a lot of contingent liability awaiting a run up. Do you have any indications on your database that credit officers are making adjustments?

Jesse Hardin: Given originations data lags, we're not going to see evidence of policy shifts in terms of origination volumes or limits for several months after credit policy decisions have been made. The Federal Reserve does put out their Senior Loan Officers Opinion Survey which shows the net number of banks tightening credit policy in Q3'23 which indicates banks being more selective in lending standards across all major lending categories.

Are we aware of any larger line strategy shifts post 2020 that could be contributing to the jump in utilization? If lines are being reduced via bank strategy, then utilization can jump abnormally.

Maria Urtubey: Based on the August 2023 origination credit trends, Bankcard origination limits have increased to an average of $5,626 - an increase of 13.4% compared to August 2022; it stands at an average of $999 for Subprime - a 14.6% increase. In reviewing the October 2023 portfolio credit trends, we also observe an overall increase in credit limits. The average 21.1% utilization (compared to 20.2% in October 2022) is driven by higher usage, not from carrying higher consumer balances as a percent of a decreasing limit availability.

Did subprime shrink or were scores artificially higher during the COVID lockdowns with stimulus, payment deferrals, lower spending, etc. deleveraging consumers' debt?

David Sojka: While we saw some consumers move out of the subprime space into higher credit tiers because they had access to stimulus funds and their spending was curtailed during the pandemic, there are always new consumers entering the space who might be subprime. The percentage of consumers applying for credit in the subprime space has shrunk slightly, less than 2%, so overall the subprime share really hasn't changed much over the last several years.1

 

1 Equifax Credit Trends Data 

* The opinions, estimates and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any representation or warranty with respect to such material and should not rely upon it as such. Equifax does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice. The opinions, estimates, forecasts, and other views published herein represent the views of the presenters as of the date indicated and do not necessarily represent the views of Equifax or its management.