FICO's latest quarterly survey of bank risk managers indicates that 44 percent expect credit-card delinquencies to increase in the next six months. Thirty-five percent expect delinquencies on car loans to increase, which is troubling given that auto sales have been one of the few bright spots of the economic recovery. This marks the fourth straight quarter that pessimism about consumers' ability to pay auto loans and credit-card bills has increased.
However, Andrew Jennings, chief analytics officer at FICO and head of FICO Labs, says rising delinquencies could indicate that more consumers can now borrow money. Noting that a certain percentage of consumers will always struggle to repay, he says, "This can be interpreted as a healthy sign after lenders spent much of the past five years constricting credit availability and being risk-averse." The FICO survey shows that banks anticipate increased consumer borrowing during the next six months, with 65 percent expecting a jump in average credit card balances and 61 percent expecting an increase in new credit requests.