ATLANTA — According to its most recent report on consumer credit trends, Equifax discovered several signs that the credit cycle is moving towards stabilization and growth, while subprime lending is also increasing in the auto, bankcard and consumer finance segments.

Auto loan originations, in particular, contributed to the good news, rising nearly 17 percent year-to-date in April and currently up 9 percent month-over month.

Still, signs of the recession shadow the business. Though both banks and captive financiers are originating more auto loans, banks are being much more cautious when it comes to the subprime sector.

According to reports, captive finance sources issued almost 25 percent of new auto loans to buyers with scores under 600 in April. The comparable bank subprime number is about 8 percent.

For the credit market as a whole, Equifax’s Credit Trend Report for June shows payment behavior has improved and loan portfolios are lower risk.

The company also noted write-offs have peaked, spurring origination momentum.

Research shows that new credit dollars are not only increasing for the auto segment's revolving lines on a year-to-date basis, but also for bankcards, student loans and home equity.

Total new credit available has spiked from $209 billion year-to-date in April 2010 to $240 billion this past April — marking an upswing of almost 15 percent.

Though this number falls far below the $400 billion plus of 2006 and 2007, company officials note this is the first increase recorded after four years of sharp declines.

"Trouble spots remain," said Michael Koukounas, Equifax's senior vice president of client services.

"While many delinquencies have peaked, severely delinquent home finance loans — the shadow inventory — remain elevated. Student loan delinquencies and write-off balances have not peaked and continue to increase.

"However, positive momentum is evident in that loans opened since 2008 with much tighter underwriting are doing much better than loans booked between 2005 and 2007. More than two-thirds of all delinquent balances are from these earlier loans," he continued.

Delving more into specific aspects of the credit market, Equifax said the number of bankcard originations is also on the rise, a trend especially evident among subprime borrowers.

Equifax found that the number of bankcard originations to subprime borrowers rose by 80 percent for April year-over-year.

Additionally, subprime bankcard origination levels for  January through April of this year are up more than 66 percent over 2010 levels. 

“This is of note when compared to the 63 percent year-over-year decrease the industry witnessed for the same period from 2008 to 2009,” stressed company officials.

Also of interest, the total new bankcard limits saw an increase, as well, with an uptick of more than 27 percent from January to April, when compared to the same period last year. New subprime bankcard credit limits experienced an increase of 68 percent during the same period.

Lastly, Equifax recorded some noteworthy consumer finance trends that also show signs of returning confidence in the market.

Reports showed that new consumer finance credit loans grew 3.5 percent year-to-date and two percent month-over-month in April.

Following trends seen in the bankcard and auto segments, these loans also showed increases in the subprime market. Loans to customers with credit scores below 599 came in at 41 percent, 2 percent over 2010 and almost 10 percent over 2006, the company noted.

Equifax’s national analysis is sourced from data on more than 200 million credit files, according to company officials.