Consumer are working on their debt to credit ratios and payment history
A recent report by TransUnion, one of the three major credit bureaus, found the the nation’s delinquency rate fell to its lowest level in 17 years. The delinquency rate is a measurement of consumer late payments older than 90 days. The report also found the average debt per borrower is $4,699.
This is somewhat surprising news given the state of the poor economy. More Americans are paying on time and are focused on lowering the amount of debt they carry. This might signal the shift in the behavior by consumers to be more responsible with their finances.
These are all positive effects on consumer credit scores. They are actively lowering their debt to credit ratio and make sure they are paying on time. These are the two largest areas of a credit score and give the greatest positive effect to improve a credit score.
The report also states that lenders are holding consumers to a high standard before lending; stating they are looking closer at length of employment and credit history. But does that really hold water when credit card companies have doubled the amount of credit card offers they send in the mail from 2009 to 2010? Or are we really seeing a change in behavior in consumers to be better at paying on time and need to carry less debt.
The real answer will be seen over time. The economy is not due to be better anytime soon and consumer are more than likely to stay frugal till better times are on the horizon.
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Posted in Credit Score, economy, Late Payments
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