Consumers’ credit shaping up
Fort Wayne-area residents are being careful with plastic.
Average credit card debt is down and credit scores are up in the Fort Wayne metropolitan statistical area, according to Experian’s annual State of Credit report. The MSA, which comprises Allen, Wells and Whitley counties, ranked 84th among 211 MSAs for its credit rating.
Credit scores are on the rise nationwide, and improved credit behaviors indicate a strong credit market, Experian, a credit monitoring company, said in a news release. Scores have yet to rebound to 2007 levels, before the Great Recession.
Joe Schenkel, former president of Consumer Credit Counseling, a Fort Wayne nonprofit that has since merged with another nonprofit, viewed the numbers with concern that history could repeat itself.
“2007 was the peak of things, with loose credit and people carrying large amounts out on credit,” he said. “I think folks learned their lessons, some.”
A credit score, which can range from 300 to 850, is a measure of consumer ability to repay a loan. The nation’s average score is up four points to 673 since last year.
“We are seeing the positive effects of economic recovery, with the rise in income and low unemployment reflected in how Americans are managing their credit,” Michele Raneri, vice president of analytics and new business development at Experian, said in a statement. “All credit indicators suggest consumers are not as credit stressed. Credit card balances and average debt are up, while (national) utilization rates remained consistent at 30 percent.”
A utilization rate – calculated as a percentage – is credit used versus credit available. Indiana matches the 30 percent national rate, while the Fort Wayne MSA utilization rate is 28 percent, the same as last year.
Minnesota topped the state rankings with an average credit score of 707; Mississippi was last with 645.
Fort Wayne’s 2016 score of 677 is up three points from last year and is the best among six Indiana metros studied.
Indiana’s average score is up by four to 665 but ranks in the bottom third among states. Among surrounding states, only Kentucky had a lower score at 661.
Schenkel said that while he doesn’t know why Indiana’s average score ranks low, numerous factors make up a credit score, with a history of paying on time the biggest.
“You can ruin a credit score real fast, but you can’t improve a credit score real fast,” he said.
The Fort Wayne MSA’s average credit card balance is down $27 from last year to $4,513. That represents a 15 percent decline since 2007. Average debt, excluding mortgage debt, is up 10 percent since 2007 to $33,216. Mortgage debt is up 4 percent to $104,968.
“A lot of folks went through some pretty tough times,” Schenkel said, referring to the Great Recession. “The banks went through some tough times writing off amounts as people wound up going through bankruptcies. I think both sides learned some, but are memories short? I don’t know.”