Market Trends of United States Credit Agency Industry
Impact of Increasing Consumer Credit Outstanding in United States
The total outstanding consumer credit in the United States increased year-on-year. In 2021, the consumer credit outstanding in the U.S. amounted to approximately more than USD 4 trillion, a significant increase from the previous year. These current levels of consumer debt show that the Federal Reserve's raising interest rates have not slowed down consumer borrowing.
In August, non revolving credit, which largely comprised auto, student, and personal loans, increased at an annual rate of 5.1 percent. This level remained roughly unchanged from July. Revolving credit, however, increased significantly at an annual rate of 18.1 percent; revolving credit includes credit cards, home equity lines of credit (HELOC), and personal and small business loans. While late payments and defaults thus far seem to be under control.
Growth in New Business Driving the Market
According to data from the US Census Bureau, there has been a significant surge in new business creation since the onset of the pandemic in 2020. In 2022, 5.04 million new businesses were started, which is higher than the annual average of 4.4 million businesses.
Additionally, there were 5.4 million new business applications filed in 2021, the highest number on record and a 53% increase from 2019. Although the pace of new business creation has slightly slowed down, the rate of new businesses being created is still higher in 2022 than before the pandemic. With more businesses being created, there will be a greater demand for credit ratings. New businesses often require funding and financing, and lenders, investors, and even suppliers may rely on credit ratings to assess the creditworthiness of these businesses.
The growth in new businesses can drive innovation and the adoption of advanced technologies in the credit rating industry.
