What does the delinquency ratio in credit card performance tools measure?

The delinquency ratio in credit card performance tools specifically measures the value of receivables that are more than 90 days past due. This metric is crucial for assessing the credit risk associated with a portfolio of credit card accounts. When receivables are 90 days past due, it indicates a significant level of default risk, as customers who are this far behind in payments may be in distress and less likely to recover.

This measurement helps financial institutions and risk managers evaluate the overall health of their credit card portfolios, identify potential problems early, and formulate strategies for risk management. A higher delinquency ratio can prompt a re-evaluation of credit policies, risk assessment models, and collection strategies, ensuring that lenders maintain a stable performance in their credit operations. Understanding this metric allows lenders to anticipate losses and manage their credit exposure effectively.

In contrast, the other options measure different aspects of credit card performance. The percentage of customers late on payments gives a broader view of customer payment behavior but does not focus exclusively on severe delinquencies. The total amount charged off reflects actual losses incurred and is contingent on delinquency, rather than a metric of ongoing credit performance. The ratio of outstanding credit to available credit provides insights into credit utilization and risk but does not specifically indicate