While Americans’ credit card debt levels have reached an all-time high of more than $1 trillion, their overall credit health has remained strong, according to a report from credit reporting company VantageScore.
Even with inflation, rising interest rates and concerns about the overall economy, American consumers still have room to spend.
“The consumer is not maxed out; they’re actually reducing their overall credit and managing their credit pretty well,” Silvio Tavares, CEO of VantageScore, told CNBC in a recent exclusive interview. “The reality is the consumer is pretty healthy.”
Despite this benchmark of $1 trillion in credit card debt, the average VantageScore credit score remained stable in September for the third month in a row at 701, up four points from the same month last year .
Meanwhile, the national average FICO credit score increased two points from last year to a new high of 718, according to its latest report.
Both scoring models use a numerical range of 300 to 850.
These and other credit scoring models use consumer data from the three major credit reporting agencies – TransUnion, Experian and Equifax – to establish credit scores. This number is key to helping financial institutions determine which credit cards, mortgages, auto loans and personal loans consumers qualify for – and at what rates.
“In general, consumers who have a VantageScore of 660 or higher are eligible for the best rates,” Tavares said. “So that’s really the sweet spot.
“That’s where you want to get to, and it makes you eligible for the best interest rates in a rising interest rate environment,” he added.
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