Skip nav to main content.

Consumer Credit Default Rates Rise, According to S&P/Experian

The rate at which consumers are defaulting on credit obligations have increased somewhat, but remained…

  • April 5, 2019

The rate at which consumers are defaulting on credit obligations have increased somewhat, but remained mostly steady going into 2019, according to new data released by S&P Dow Jones Indices and Experian. These reports ultimately have a lot of bearing on how hard credit issuers make it for you to get approved for loans and credit cards.

The companies have released data through February 2019 for the S&P/Experian Consumer Credit Default Indices.

These indices represent a comprehensive measure of changes in consumer credit defaults and show that the composite rate rose two basis point from the previous month to 0.92%. The bank card default rate rose six basis points to 3.48%. The auto loan default rate remained unchanged at 0.99%. The first mortgage default rate was one basis point higher at 0.70%.

Four of the major MSAs showed higher default rates compared to last month. The rate for New York increased 6 basis points to 1.05%, while the rate for Chicago rose four basis points to 0.92%.

The default rate for Los Angeles was up two basis points to 0.51%. The rate for Dallas was one basis point higher at 0.90%, while the rate for Miami decreased 12 basis points to 2.07%.

After seven straight months of decline, bank card default rates have now increased for three consecutive months.

This upward trend has been the primary contributing factor to the concurrent increase in the composite default rate, which has seen its rate increase for five straight months. All default rates are lower compared to 12 months ago.

“This month’s data show that four of the five cities tracked as well as all consumer credit default categories were higher in February,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “This is more of a seasonal shift than a sign of rising default rates.”

Blitzer continued, “Over the last several years, December, January and February have all experienced increases in default rates across cities and loan categories. Further, none of the figures suffered large increases compared to their levels of one year ago. Retail sales saw strong gains in January and auto sales continued at an annual rate of about 16.5 million vehicles. Any upward pressure on mortgage defaults stemming from the rise in home prices over the last few years is being offset by weakened sales of new and existing homes.”

So, credit defaults are “mostly steady”. Credit issuers are not alarmed. But there are some reasons to expect that it might get a bit more difficult to obtain credit on favorable terms in the months ahead. The biggest of these are higher interest rates.

Rates have crept higher recently, and it’s already having an impact on the cots of credit for “big ticket” items like cars and houses.