FICO data presents mixed picture of debt management by UK consumers

In a similar vein, the data shows a marked increase in accounts with two missed payments.

Before the unexpected rise in inflation revealed yesterday, January saw inflation slightly pegged back compared to the end of 2022; retail sales also improved marginally in the new year.

However, the balance for two missed payments dropped, potentially reflecting curtailed spending.

Analysis shows that UK consumer credit behaviour in January 2023 generally following typical seasonal patterns. However, there was a spike in those customers missing two payments — 13.6% month-on-month — which could ring alarm bells for lenders.

Although, it should be noted that the average balance on accounts with two missed payments is 1.9% lower month-on-month.

Meanwhile, the number of accounts that missed one payment in January is 1.7%, a 0.7% reduction from December 2022, with the yearly change sitting at 9.1%.

The average UK Credit Card spend for January 2023 was £755, an 8.1% reduction month-on-month, while in terms of year-on-year changes, the average spend was up 13.2% from January 2022.

The average card balance was £1,650, which was 0.6% lower than the previous month.

A FICO representative commented: “December saw more accounts falling one month behind, and the increase in two missed payments in January appears to be moving the delinquency forwards.

“With Consumer Duty a priority for the FCA, lenders will want to ensure they are taking the right actions with those customers showing signs of financial difficulty. There may, however, be some comfort in the fact that the average balance of two missed payments continues to decrease and has been dropping since October 2022.

“Lenders will also welcome the fact that the number of consumers missing one payment in January dropped month on month; usually in the first month of the new year there is an increase in one-month missed payments. However, this needs to be balanced against the fact that we saw a high increase in one-month missed payments in December, so this is more of a levelling off than a reduction and the percentage is still high.”