Market Trends
The December release of the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed the national composite* increased for the second consecutive month, reaching 1.64 percent in November. The first mortgage default rate also continued its increase, moving from 1.47 percent in October to 1.58 percent in November. All other loan types – auto loans, bankcard and second mortgage – posted decreases in their default rates in November.
Bankcard originations have continued to increase, with Q3 2012 originations increasing 32 percent over Q3 2011. On average, 66 percent of the population now holds one or more bankcards. However, the percentage of consumers who have a bankcard varies greatly by VantageScore® tier:
To learn the status of Americans' current credit card spending, Credit.com recently compiled a list of the states with the highest average bankcard balance per consumer in the third quarter of 2012. While several Northeastern states dominated the list, Alaska took first place, with an average bankcard balance per consumer of $5,572. On the other end of the spectrum, North Dakota and Iowa had the lowest bankcard balances, at $3,595 and $3,624, respectively.
Returns on investment from superior customer-centric strategies easily can exceed 20 percent in the first year of implementation. However, this number is compounded exponentially in subsequent years due to repeat business, new customer referrals and customer loyalty. Learn more about the design and deployment of holistic retail bank customer-centric strategies that synthesize critical information and qualitative banker insights. Source: Implementing differentiated customer-centric strategies: Retail-banker-friendly strategy development that resonates with your customers and shareholders, an Experian white paper.
Six states are the top producers of turkeys: Minnesota at 46 million, North Carolina at 36 million, Arkansas at 29 million, Missouri at 17.5 million, Virginia at 17 million and Indiana at 16.5 million. This accounts for nearly two-thirds of turkeys produced in the United States as of September 2012. The average wholesale price for frozen whole turkey during fourth-quarter 2012 is projected to range from $1.10 to $1.14 per pound -- similar to the 2011 fourth-quarter average price of $1.11 per pound. The average retail price for whole frozen turkeys in September 2012 was $1.62, about 6 cents lower than the average retail price for whole frozen turkeys in September 2011. Source: National Agricultural Statistics Service (NASS), Agricultural Statistics Board and United States Department of Agriculture (USDA).
When validating a model in the presence of overlay criteria, it is important to remember that any metrics computed at the aggregate portfolio level will not be indicative of the model's true performance. While traditional validation methodologies and portfolio metrics may provide directional insight into model performance, the overlay strategy is an additional variable that must be accounted for in each step of the validation analysis. An effective validation should include: Establishment of an appropriate base line Piece-wise validation of overlay segments An overlay strategy analysis Do you have model validation questions? Learn more and transform your business goals with Experian's Analytical Consulting Services. Source: VantageScore® Solutions LLC white paper: Validating a Credit Score Model in Conjunction with Additional Underwriting Criteria. VantageScore® is owned by VantageScore Solutions, LLC.
As of Q2 2012, subprime borrowers are carrying the largest retail card balances, with an average card balance per account of $620 and $700 for VantageScore® credit score D and F tiers, respectively. The national average balance on a retail account is $329 — an increase of 39 percent over 2011. VantageScore® credit score A tier (super-prime) consumers carry the lowest average balance at $99 per account. Source: Experian-Oliver Wyman Market Intelligence Reports. VantageScore® is owned by VantageScore Solutions, LLC.
Returns on investment from superior customer-centric strategies easily can exceed 20 percent in the first year of implementation. However, this number is compounded exponentially in subsequent years due to repeat business, new customer referrals and customer loyalty. Learn more about the design and deployment of holistic retail bank customer-centric strategies that synthesize critical information and qualitative banker insights. Source: Implementing differentiated customer-centric strategies: Retail-banker-friendly strategy development that resonates with your customers and shareholders, an Experian white paper.
During Q2 of 2012, home equity line of credit (HELOC) delinquency rates were the lowest in recent years. The delinquency rate fell below 1 percent for all performance categories: 30 to 59 days past due (DPD) fell to 0.88 percent; 60 to 89 DPD was at 0.42 percent and 90 to 180 DPD was at 0.99 percent. Source: Experian-Oliver Wyman Market Intelligence Reports.
Not surprisingly, bankcard utilization is the highest among subprime consumers with VantageScore D and F tiers having average bankcard utilization rates of 68% and 81% respectively. In comparison, VantageScore A tier (super prime) consumers had an average bankcard utilization rate of 6% and VantageScore B tier (prime) consumers had an average bankcard utilization rate of 15%. Join our panel of experts on October 23 to hear from industry experts on key regulations that are changing the way banks need to conduct business in order to grow and stay profitable. Source: Experian Oliver Wyman Market Intelligence Reports.
The August 2012 edition of the S&P/Experian Consumer Credit Default Indices showed that bankcard, first-mortgage and second-mortgage default rates hit new post recession lows. The first mortgage default rate decreased slightly, from 1.41 percent in July to 1.40 percent in August, and has been down or flat for eight consecutive months. The second-mortgage default rate fell to the lowest in its eight-plus-year history, reaching 0.72 percent. Bankcard default rates fell the most in August, from July's 3.83 percent to 3.77 percent, the lowest rate in five years. Source: Press release: Consumer Credit Default Rates Remain Near Recent Lows in August 2012.
In Experian's recent State of Credit study which analyzes credit scores in more than 100 cities, Minneapolis took the number one spot, with an average VantageScore® credit score of 787. The Midwest dominated the top 10 spots in the rankings and Wisconsin consumers continue to demonstrate their credit savvy, with four of the state's metropolitan areas making the top 10 list for the second year in a row. Top 10 highest average credit scores by city VantageScore® credit score rank City State Average VantageScore® credit score 1 Minneapolis MN 787 2 Madison WI 786 3 Wausau WI 785 4 Sioux Falls SD 784 5 Cedar Rapids IA 783 6 San Francisco CA 783 7 Green Bay WI 781 8 La Crosse WI 779 9 Boston MA 778 10 Duluth MN 777 View an interactive map and read the complete results of the State of Credit 2012 study. Source: Experian's State of Credit 2012 study VantageScore® is owned by VantageScore Solutions, LLC.
The average bankcard balance per consumer in Q2 2012 was $4,170, which is 4 percent higher when compared to the same quarter of the previous year. VantageScore A and VantageScore B tiers (super prime and prime) saw bankcard balances increase by 31 percent and 11 percent respectively, while all other VantageScore® tiers experienced annual balance decreases during the same timeframe. Listen to our recorded Webinar on consumer credit trends from the Q2 2012 Market Intelligence Reports, including bankcard trends and an in-depth look at the current state of the U.S. real estate market. Source: Experian Oliver-Wyman Market Intelligence Reports VantageScore® is owned by VantageScore Solutions, LLC.
The Experian/Moody's Analytics Small Business Credit Index edged up 0.9 points in Q2 2012, to 104.1 from 103.2. High-level findings from the Q2 report show that credit quality will be slow to improve in coming months, and threats to consumer confidence and spending have become more prominent. Business confidence is in line with an economy growing below potential. This factor could affect hiring through the rest of the year, postponing the emergence of a strong, consumer-led recovery. Download the entire report on Small Business Credit. Source: Experian press release—Aug 7, 2012: Small-business credit conditions slightly improve as economy shows signs of stalling
The pressures for both credit unions and banks, to generate returns to drive greater earnings are ever present. According to recent data released by the National Credit Union Administration, the nation's 7,019 federally-insured credit unions added 667,000 new members in the first quarter of 2012 to a record of 92.5 million. To offset these pressures, portfolio managers are aggressively expanding their policies and practices to drill more deeply and frequently into their portfolios. Increasingly, this requires the ability to trend consumer credit data, identify specific member metrics, and track those changes over time. Redefining the information your portfolios provide can by key to developing increased ROI. Learn how trended data can help you maximize your strategies and process to produce results in today's complex business environments. Source: How to drill deeper into your portfolio