Average FICO® Score in Canada Drops Two Points to 760

To further understand the type of stress some Canadian consumers are experiencing, we continue to track key credit dimensions that comprise a borrower's FICO® Score. Let's look at some of the latest trends impacting these Canadian consumer credit health characteristics:

• Missed payments continue to rise. When looking at the percentage of the population that has been 90+ days past due on their credit obligations in the last six months, we observed this metric improve dramatically through the early pandemic, and remain relatively low through 2022, as seen in Figure 3. However, by April 2022, the proportion of the population that had been 30+ days past due in the prior year had increased from the early-pandemic low. By April 2023, we saw the more severe 90+ delinquency rate begin to increase as well, and it has continued to do so in 2024, with a 9.6% year-over-year relative increase in the percentage of the population that has been 90+ days past due on credit obligations in the prior six months. While that rate (3.4%) currently sits just below the pre-pandemic level (3.7%), it's important to note the increasing trend, and the percentage of the population with milder 30+ days past due delinquencies remains notably higher than its pandemic lows.

• Examining delinquency trends by industry. We see that the proportion of the population that has been 30+ days past due on auto finance loans in the last year has increased by 12.5% relative to 2023. For real estate loans, the same metric has increased by 14.2% relative to 2023. Both of these markers will be important for lenders to observe going forward, especially in a high-interest rate environment, and more specifically, as many mortgages reset to higher interest rates. Bankcard delinquency rates also continue to rise, albeit more modestly than their auto finance and real estate counterparts. However, we must also consider the increasing trend in bankruptcies and proposals-with personal insolvencies rising by 12.4% in Q2 2024 relative to the same quarter in 2023 and now sitting at a four-year high. Prudent underwriting and portfolio management will be especially important for lenders as more signs emerge that Canadian borrowers are struggling with debt they may no longer be able to afford.

• Debt levels continue to rise. Following the delinquency trend, credit card debt for Canadian consumers dropped markedly during the early pandemic, driven by the combination of government stimulus and reduced discretionary spending. However, credit card debt has been increasing since the pandemic lows of April 2021, and now sits just shy of pre-pandemic levels. Average credit card balances for Canadian credit borrowers are up 4.9% relative to April 2023, and 14.4% relative to the early pandemic lows in April 2021. Average credit card utilization continues to shift higher and is now just 0.1 percentage points lower than just before the pandemic.

• Canadian consumers are seeking and obtaining new credit at higher rates. The early pandemic period (2020-2021) saw a low in the percentage of the population that had opened one or more new accounts in the last year. Since then, that percentage has steadily increased and is now at 33.5%, which is nearly identical to pre-pandemic levels. As Canadians begin to struggle with rising credit card debt and higher interest rates, they may be seeking and obtaining new credit to help manage rising debt levels and higher pricing on those debts.

Figure 3: Credit metrics

Note: FICO® Scores are calculated using five categories of credit history data provided by the two credit bureaus in Canada: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).

As Canadian consumer credit trends shift, the FICO® Score continuously evolves and reflects the underlying changes in credit behavior. Figure 4 looks at the one-year change in average FICO Score by different starting FICO Score bands and tracks this over the last few years. With this view, we see that lower-scoring borrowers - especially those in the 550-650 range - experienced notable increases in their average credit scores through the early pandemic period between April 2020 and April 2021. As the key credit metrics in Figure 3 began to regress relative to the pandemic lows, we saw a significant decrease in the average YoY FICO Score difference in the April 2021 to April 2022 period. With the latest data, we see that the average YoY change in FICO Score for borrowers in the 550-650 range seems to have stabilized.

Figure 4: Change in average FICO® Score 10 by score band

While some economic headwinds, such as inflation, have started to subside, Canadian consumers are still grappling with financial challenges such as high costs of goods and housing. The complex pressures on Canadian consumers and the Canadian economy require us to stay on top of the latest trends to better anticipate what may lie ahead.

FICO, as the credit scoring industry leader, will continue monitoring key consumer credit health metrics and FICO® Scores, and will communicate our findings regularly to the Canadian credit ecosystem to further enable participants to chart the best course for the road ahead.

Stay tuned for our upcoming blog which will provide additional insights into key segments of the population that appear to be driving the recent downward trajectory of the average FICO® Score.

Leveraging advanced analytics, FICO is dedicated to helping lenders gain deeper insights into the credit risk each borrower represents, enabling them to make more informed lending decisions. If you have more questions, please visit these helpful resources:

• FICO Score 10, Most Predictive Credit Score in Canadian Market

• FICO® Score 10 supports predictive consumer credit risk management for Canadian lenders

• The FICO® Score Open Access program allows lenders to help educate Canadian consumers about their FICO® Scores by providing comprehensive and transparent information to help them understand their scores

• 2023 Average Canadian FICO® Score Holds Steady at 762

• FICO® Scores vs. Credit Scores