Consumer Credit in the US

PROSPECTS

Card lending remains the fastest growing area in consumer credit

After a slight slowdown in 2018, outstanding balance for card lending regained the number one spot as the fastest growing category within consumer credit. An increase in younger borrowers entering the credit market has coincided with a spike in delinquency rates, which achieved a 7-year high according to the Federal Reserve Bank of New York.

Sombre outlook as application rejection rates and account closings increase

According to the Federal Reserve Bank of New York, application rates over the past 12 months are in decline, while there has been a substantial increase in rejection rates versus prior years, especially in consumers aged 40 and below. Lending standards have tightened over the past years limiting access to credit for certain segments of the population.

Alternative lenders bring in unbanked

Over a quarter of households in the US are either unbanked or underbanked according to a recent survey carried out by the FDIC. Aiming to provide an inclusive banking system, the US government closely monitors financial institutions in order to ensure that efforts are being made to expand consumer base to include unbanked and underserved consumers.

COMPETITIVE LANDSCAPE

Affirm: Changing the way we pay online

Founded in 2009, Affirm is an online alternative financial service provider and has built trust among consumers through transparency. The point of sale (POS) financing market has been significantly growing in the US and is currently highly fragmented with no single institution dominating the space.

Credit Karma and Experian set for global expansion

The US credit reporting market is under the control of three main credit bureaus: Experian, TransUnion and Equifax. With significant barriers to entry in the credit reporting industry, new players are unlikely to be able to enter with a comparable scope of consumer data.

Experian boosts credit scores across the country

Credit history length and credit score are commonly used to determine the level of access a consumer may have to different types of credit and financial institution services. Current administration has pushed for more transparency about how credit scores are calculated, in addition to making them more readily available to consumers as they start their journey to credit score improvement.

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