U.S. consumer ‘quite healthy,’ as credit scores rise

While Americans’ credit card debt levels have reached a record high of more than $1 trillion, their overall credit health has remained strong, according to a report from credit scoring company VantageScore. 

Even with inflation, rising interest rates and concern about the overall economy, U.S. consumers still have room to spend.

“The consumer is not maxed out; they’re actually reducing their overall credit and managing credit pretty well,” VantageScore CEO Silvio Tavares told CNBC in a recent exclusive interview. “The reality is the consumer is actually quite healthy.”

Despite that $1 trillion credit card debt benchmark, the average VantageScore credit score held steady in September for the third consecutive month at 701, up four points from the same month last year.

Meanwhile, the national average FICO credit score rose two points from a year ago to reach a new high of 718, according to its latest report.

Both scoring models use a numerical range of 300 to 850.

These credit scoring models and others use consumer data from the three main credit bureaus — TransUnion, Experian and Equifax — to come up with credit scores. That number is key to helping financial institutions determine what credit cards, mortgages, auto loans, and personal loans consumers qualify for —and at what rates.

“Typically consumers that have a VantageScore of 660 or above are eligible for the best rates,” Tavares said. “So that’s really the sweet spot.

“That’s where you want to get to, and that makes you eligible for the best interest rates in a rising interest rate environment,” he added.

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