00:00 Speaker A
Big banks posting solid first-quarter earnings with credit quality holding up against the backdrop of economic uncertainty. Our next guest says consumers are showing resilience despite the market volatility. Joining me now is Silvio Tavares, CEO and President of VantageScore. Silvio, great to see you.
00:14 Silvio Tavares
Great to be here, Josh.
00:16 Speaker A
So we’re as investors, we’re always looking for lines of sight. How’s the American consumer holding up? Based on the credit data you have, what do you see?
00:24 Silvio Tavares
Well, we have the most comprehensive data set at VantageScore, over 200 million consumers, and what we saw through the end of March is actually the consumer is credit healthy. Uh we measure credit health by uh the VantageScore credit score. A perfect VantageScore is 850, a very low is 300, and it came out at 702 through the end of March. So a very healthy credit score.
00:49 Speaker A
What do you chalk that up to, Silvio?
00:51 Silvio Tavares
Well, it’s it was a surprise. I I got to tell you, Josh, we were expecting consumers to have uh deteriorating credit quality. In fact, the opposite was true. If you look at auto loans, credit cards, personal loans, mortgages, across every single one of those credit products, credit delinquencies actually declined compared to February. So consumers are doing everything they can to really get their personal balance sheet in order. Um they are credit healthy and they want to maintain that credit health because, of course, they’re concerned about what happens next.
01:17 Speaker A
So they’re credit healthy, Silvio. I guess the big question is do you expect them to remain credit healthy? And what what what are the variables that would depend on?
01:25 Silvio Tavares
Yeah. So one of the most important things for credit health is employment, and consumers are still overwhelmingly well-employed. We’re at historic highs in terms of overall employment. But also, consumers are keeping an eye on their personal balance sheets. They’re looking to make sure that they’re not overextended on their credit products. We actually saw credit utilization for credit cards decline on a month-over-month basis. So consumers actually trying to lower those credit balances. And what I attribute this to is consumers really trying to focus on making sure that they are credit healthy because there’s a lot more uncertainty and risk ahead and they want to be ready for that.
02:04 Speaker A
You know, we talk about this the consumer, so we often talk about like it’s one consumer, but of course, there’s high income, middle, low. Are you seeing any differences there that are worth calling out?
02:15 Silvio Tavares
Absolutely. Um you know, traditionally in a weakening or decelerating economy, it’s the lower-income consumers that are most vulnerable. One of the trends that is counterintuitive that we’ve seen over the last several years is if you look at the high-income consumer, those making over 150,000 a year, so roughly twice the median income, those consumers have actually been having a very significant increase in delinquencies. If you look from January 1st to 2023 to March 31st, what you see is that credit delinquencies have increased by 103% for the high-income consumer. So that’s a cause for concern. That’s something that we are very much focusing on as we look to the balance of this year.
03:05 Speaker A
Silvio, always great to see you, especially when you come here and see us on set. Thank you, sir.
03:10 Silvio Tavares
Thanks for having me, Josh.