Three credit union market perspectives – Q3 2023

At a time when the economy remains in a state of flux and financial stresses persist, this article outlines three key observations from our recent credit union market perspectives report.

  1. Federal student loan payments are set to resume in September for millions of U.S. consumers. TransUnion research indicates while the average student loan payment coming back into repayment is less than $400, nearly two-thirds of those consumers have less than $300 in excess monthly liquidity.* This is likely to create significant performance concerns across adjacent portfolios like credit cards and unsecured personal loans. Credit unions that incorporate trended liquidity attributes like aggregate excess payment into underwriting criteria and portfolio management routines can more accurately identify consumers who have the highest risk of diminished capacity to pay.
  2. TransUnion research suggests consumer credit scores have been on the rise, but the performance of recent origination cohorts has been deteriorating faster than origination vintages from prior to 2020.* Scores still rank order risk and predict outcomes very effectively, but newer loans are performing notably worse than loans originated prior to the global pandemic. In addition to trended or blended credit scores, lenders should have a solid plan for incorporating credit attributes that provide deeper insight into consumer behaviors into their decisioning strategies. Doing so will help isolate the highest risks more effectively.
  3. Some lenders experienced growth in credit card and personal loans, but overall, most originations declined across products.* The growth in credit card and personal loans can partly be attributed to inflationary pressures consumers continue to face. Growth in auto, mortgage and home equity continued to be somewhat muted compared to prior years — due largely to the increasing rate environment.

To learn more, read the full Credit Union Market Perspectives Report.

Source: TransUnion U.S. Consumer Credit Database 2023
Ron Duenas

Ron Duenas

Ron Duenas is a Senior Consultant, Community Financial Institutions at TransUnion, where he helps community financial institutions use Information for Good. Prior to joining TransUnion, Ron worked in the Credit ... Web: Details