TransUnion: Credit card delinquencies drop to lowest level in two decades

Credit Risk Software a Necessity for Lenders

Credit risk software is an essential tool for financial institutions and lenders to have. Borrowers must have a strong history to prove that they will make payments on time and always be able to make at least the minimum. Research released earlier this week though, suggests that Americans could be turning into more creditworthy borrowers.

A recent TransUnion study found that the nation’s credit card delinquency rate dropped to 0.57 percent in the second quarter from 0.63 percent. That is the lowest level since 1994.

Credit card delinquencies are the ratio of accounts that fall 90 days past due. The survey also revealed that the average level of debt per borrower fell to $4,965 in the second quarter from $4,971 a year ago. However, this was an increase from $4,875 in the previous quarter.

“Despite recent improvements in the employment situation, consumers continue to value their credit card relationships as a primary means of liquidity,” Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, said in a company press release. “This is best demonstrated by the historically low credit card delinquency rates we observe today.”

Becker added that the data also suggests that consumers will continue to prioritize their credit card relationships over other credit obligations and that delinquencies should remain low into the near future.

With strong credit application processing software, financial institutions can be sure to invest in creditworthy borrowers. Even with delinquency rates falling, it is still essential for long-term profitability to choose clients who will make timely payments.

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