As reported today by FICO and NBKI, Russia’s credit bureau, Russian borrowers’ credit health has been falling for two years, and reached a new low in July. The FICO® Credit Health Index had reached 98 points, the lowest level since the Index began in 2008, and two points lower than the previous low five years ago.
Why? FICO and NBKI believe this is the result of the credit market expansion.
The FICO Credit Health Index measures Russia’s overall credit health, based on the percentage of consumer loans and credit cards reported to NBKI as delinquent by more than 60 days. Expansion of unsecured credit — which generally has higher delinquency rates — combined with a slowing of new accounts has caused the index’s erosion.
When will this fall stop? It could be soon, according to Alexander Vikulin, CEO of NBKI. “The quality of new loans is high, based on the repayment patterns, so we expect that the index will increase bit by bit," he said.
In the meantime, lenders should heed the advice of Evgeni Shtemanetyan, who directs FICO’s operations in Russia. "Lenders should focus on improving the performance of existing customers and implementing more intelligent risk management systems.”