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Johannesburg - With the ever increasing petrol and food prices and an interest rate increase this week, it is not surprising that TransUnion's credit health monitor shows that consumers are still taking strain.
The latest TransUnion Consumer Credit Index (CCI) shows that consumer credit health deteriorated at a slower pace in the fouth quarter of 2013 than in the previous four quarters, but it remains under pressure.
This is indicative of difficult financial conditions.
TransUnion, which manages credit and information, said in a statement that, while the index increased in the fourth quarter, it still reflected deteriorating consumer credit health and that it was too soon to become complacent about the risks posed to consumers and credit providers.
The CCI is a unique indicator of consumer credit health based on a 100-point scale. An index above 50.0 indicates improving credit health, below 50.0 represents deterioration.
Credit health refers to the ability of consumers to service existing credit obligations within the constraints of monthly household budgets.
“Unsecured loan approval rates have moderated, indicating that credit grantors are generally applying a more conservative approach to mitigate their risk and have, for now at least, been able to stabilise their loan defaults,” said Transunion CEO, Geoff Miller.
"Much will depend on whether overall economic growth and pressures in the job market stabilise in 2014, and this is far from certain at this point.”
Credit cards
Since 2010 consumers, in aggregate, have not been able to reduce their credit card utilisation,” said Miller.
“When we start seeing a reduction in credit card utilisation that will be a really positive sign,” he said.
Miller said while the index has turned higher, the fact that it remains below 50.0 indicates that credit health among consumers is still under considerable financial pressure.
“This is sobering and something we can’t ignore. We need to see the index hit 50.0 and rise above it before we can begin to talk about turning the corner,” said Miller.
“A sustainable solution to restoring credit health is for consumers to maintain manageable debt levels. Between more cautious banks and increasingly better credit education for consumers, we think there are some encouraging trends emerging.”
The latest TransUnion Consumer Credit Index (CCI) shows that consumer credit health deteriorated at a slower pace in the fouth quarter of 2013 than in the previous four quarters, but it remains under pressure.
This is indicative of difficult financial conditions.
TransUnion, which manages credit and information, said in a statement that, while the index increased in the fourth quarter, it still reflected deteriorating consumer credit health and that it was too soon to become complacent about the risks posed to consumers and credit providers.
The CCI is a unique indicator of consumer credit health based on a 100-point scale. An index above 50.0 indicates improving credit health, below 50.0 represents deterioration.
Credit health refers to the ability of consumers to service existing credit obligations within the constraints of monthly household budgets.
“Unsecured loan approval rates have moderated, indicating that credit grantors are generally applying a more conservative approach to mitigate their risk and have, for now at least, been able to stabilise their loan defaults,” said Transunion CEO, Geoff Miller.
"Much will depend on whether overall economic growth and pressures in the job market stabilise in 2014, and this is far from certain at this point.”
Credit cards
Since 2010 consumers, in aggregate, have not been able to reduce their credit card utilisation,” said Miller.
“When we start seeing a reduction in credit card utilisation that will be a really positive sign,” he said.
Miller said while the index has turned higher, the fact that it remains below 50.0 indicates that credit health among consumers is still under considerable financial pressure.
“This is sobering and something we can’t ignore. We need to see the index hit 50.0 and rise above it before we can begin to talk about turning the corner,” said Miller.
“A sustainable solution to restoring credit health is for consumers to maintain manageable debt levels. Between more cautious banks and increasingly better credit education for consumers, we think there are some encouraging trends emerging.”
