Federal Reserve chair Jerome Powell has acknowledged multiple times that, “My colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing, and transportation.”

The latest information from VantageScore showed that Powell doesn’t appear to be overexaggerating.

On Wednesday, the national credit-scoring and data insights company released its February 2024 CreditGauge, a monthly analysis highlighting the overall health of U.S. consumer credit.

Analysts found the average VantageScore 4.0 credit score remained at 701. The lowest VantageScore 4.0 credit score is 300, while the highest score is 850.

While the average consumer remained credit healthy, analysts said the number of consumers in the VantageScore Prime credit tier (661-780) shrank for the second consecutive month.

The VantageScore Prime credit tier contracted by 1.1% year over year with the largest moves “up” into VantageScore super prime (781-850) or “out” into VantageScore subprime (300-600), according to the company.

“The tale of two consumers is becoming more pronounced,” VantageScore executive vice president and chief digital officer Susan Fahy said in a news release.

“This trend could complicate the Federal Reserve’s efforts to effectively engineer a smooth landing because VantageScore Superprime consumers are still spending and borrowing while VantageScore Subprime consumers are finding it increasingly difficult to stay current on credit payments,” Fahy continued.

Other key insights for February 2024 CreditGauge data included:

Delinquencies rose across all VantageScore credit tiers

Delinquencies climbed across all VantageScore credit tiers and products in February (auto finance, credit card, mortgage, and personal loan).

Analysts noticed overall early-stage delinquencies surged again, marking a 0.24% uptick year-over-year.

VantageScore reported delinquencies also rose 0.06% month-over-month, from 0.98% in January to 1.04% in February.

The company said the last time early-stage delinquencies rose above 1.0% was four years ago in February 2020, when they registered 1.07%.

Average balance, utilization rate fell month-over-month

VantageScore determined overall balances remained high, increasing by $1,526 year-over-year.

However, analysts pointed out balances decreased by $417 in February compared to January.

VantageScore indicated credit card, mortgage and personal loan balances drove the decline, “which could reflect seasonal patterns and the potential of tax refunds for early filers,” according to the company.

Analysts added the overall utilization rate continued to decline for the second consecutive month, dropping by 0.3% from January.

At 52.2%, VantageScore said credit utilization reached the lowest level in nearly three years (since May 2021), “indicating that consumers overall continued to manage their credit responsibly.”

New account originations declined across all products except auto

In February, new account originations declined across all products except auto finance, which rose modestly for the first time in nearly five months, according to VantageScore.

What triggered the lift in auto finance? Analysts explained that “high inventory levels drove incentives and promotions.”

VantageScore noted personal loan originations declined the most month-over-month, sliding by 0.31%.

“This was likely due to stricter lending requirements combined with higher interest rates,” analysts said.

VantageScore also mentioned mortgage originations saw their fifth consecutive month of decline, while credit card originations fell across all generations except Silent (1928-1945), which saw a minor increase.

The entire report can be downloaded via this website.