Cautious optimism regarding consumer credit

As we do every quarter, we conducted a survey of U.S. bank risk professionals in Q2.  Our survey found that bankers are cautiously optimistic about the financial health of consumers.

We found that 38% of respondents expected credit card delinquencies to remain flat, while 31% expected them to fall, and 30% expected them to rise over the next six months.  While that’s a pretty even distribution, it means that less than 1/3 of bankers have a truly negative outlook.  For car loans, the outlook is even better -- 47% expected delinquencies to remain flat, 32% expected them to fall, and only 21% expected them to rise over the next six months.

These results make a lot of sense.  Although some consumers are struggling with debt, credit usage is under control at an aggregate level.  The ratio of non-mortgage consumer debt to disposable income is at a 15-year low of 20.7%, and credit card delinquencies and charge-offs are at pre-recession levels.

A detailed report of FICO’s quarterly survey results is available at http://www.prmia.org/PRMIA-News/USConsumerCreditRisk2011qtr2.pdf.