Loan Delinquencies Are Up, And Credit Scores Tick Down

More Americans are falling behind on their debt, and that’s hurting their credit scores.

Last month, late-stage credit delinquencies, which are payments that are over 90 days late, increased across all credit score levels. As a result, the average credit score fell by 1 point in July to 701, according to VantageScore, a credit scoring company. It’s the first drop since February.

In July, the number of consumers with superprime credit scores, ranging from 781 to 850, who were in late-stage delinquency jumped by 109% from the same time last year. The number of consumers with prime scores (661 to 780) who were delinquent for over 90 days increased by 48% from a year ago.

“Consumers in the highest VantageScore credit tiers are showing increased signs of credit stress,” said Susan Fahy, executive vice president and chief digital officer at VantageScore, in a press release.

Early and mid-stage delinquencies across credit score tiers were also up from the year before, “suggesting some borrowers are finding it harder to keep up with payments even before debts reach more severe stages,” VantageScore researchers wrote.

The credit score company said this jump in delinquencies shows how higher interest rates are straining household budgets. The Federal Reserve has kept rates high all year as it waits to see how President Donald Trump’s tariffs will impact the economy. However, Fed Chair Jerome Powell recently said the central bank is considering a rate cut at its September meeting.

Delinquencies on mortgages and auto loans had the highest year-over-year increases in July, while those on credit cards and personal loans both declined. Balances for auto loans and mortgages also increased from the previous month, even though originations fell for auto loans and were steady for mortgages.

“Sustained inflation for car and house prices is driving higher balances in these credit categories,” Fahy said.