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Experian Study Shows a Decline in the Percentage of Consumers Opening New Credit Accounts
The latest results of an Experian National Score Index study show a 16.9 percent decline in the rate at which consumers are opening new credit accounts — such as mortgages, auto loans, and credit cards — from 2001 (49.3 percent) to 2006 (41.0 percent).
| Percentage of Consumers Opening New Accounts Nationwide |
Account Type |
2001 |
2006 |
% Change
2001 to 2006 |
|
| Installment Loans* |
20.5% |
17.3% |
-15.6% |
| Bank Credit Cards |
27.4% |
22.0% |
-19.6% |
| Auto Loans |
9.9% |
8.1% |
-17.5% |
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The study also found a 12.6 percent increase in the rate at which consumers are making late payments, at least 90 days past due, on their credit accounts (e.g. mortgages, auto loans, personal loans and credit cards) from 2001 (39.6 percent) to 2006 (44.6 percent).
| Percentage Change from 2001 to 2006 |
| |
Auto
Loans |
Bank
Cards |
Installment
Loans* |
|
| Consumers at Least 90 Days Late |
-4.1% |
-11.9% |
+15.5% |
| Consumers at Least 30 Days Late |
-6.1% |
-17.8% |
+2.0% |
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Consumers Are Using More of their Available Credit
The decline in the rate of consumers opening new accounts in 2006 may give the appearance that consumers are being more conservative with regard to using credit; however this may not be the case when combined with other results from the study. For example, the data shows that balances on installment loans are increasing.
Overall Decline in Consumer Credit Scores
The national average credit score is 675, which is 7 points lower from 2001 when it was at 682. The cause of the decrease in the national average may be due to the overall increase in late payments and increase in consumers' balance-to-ratio limits (outstanding balance compared to the available credit limit).
"As we move into the holiday season, consumers should consider getting a copy of their credit report before they start their holiday spending, to verify that there are no unfamiliar accounts on the report," says Maxine Sweet vice president of public education for Experian. "A credit report is also a reminder of just how much money they already owe on each of their credit accounts. Consumers should try to keep credit card balances low and especially avoid charging them to the limit. Otherwise, creditors may view it as excessive debt and be concerned that they may not be able to pay as agreed."
The National Score Index study compared data from August 2006 and August 2001 based on a nationwide sampling of 3 million consumer credit files.
*Installment loans exclude bank cards and mortgages.
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