Consumers Managing Credit More Responsibly - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Consumers Managing Credit More Responsibly

Consumers Managing Credit More Responsibly

Consumers Managing Credit More Responsibly
The content is accurate at the time of publication and is subject to change.

The financial health of the average American credit-card holder is on the upswing while demand for new credit is declining.

Those are the conclusions of TransUnion, one of the three major credit bureaus, which tracks two indices that give important clues to the health of the credit market. The results that TransUnion released in its recent report puts the U.S. economy in the best place it has been since 2008. The results of the survey reveal that credit risk is at its lowest level in almost three years. Partially, this is due to the fact that consumers are managing their credit in a more responsible manner than they were prior to the downturn in the economy.

Risk Perspective

The Credit Risk Index (CRI) is a proprietary index of TransUnion. The index tracks the risk of credit, such as the likelihood of a consumer not making payments on their credit accounts, or the probability that a consumer will default. The Credit Risk Index is on the decline, and has been on the decline for five consecutive quarters. The decline indicates that consumers are less likely to default on credit card payments. All indications are that consumers are acting responsibly in managing and repaying their debt.

According to the global chief scientist at TransUnion, Chet Wiermanski, “The broad and steady decline in the Credit Risk Index, coupled with a moderate decrease in the demand for credit over the previous year suggests that consumers continue to live within their means, tending to acquire new credit only for larger, specific purchases. The percentage of consumers delinquent on any credit account has returned to the level immediately preceding the Great Recession, which is the primary reason for the decline in the Credit Risk Index. During this period, consumers have fundamentally changed the composition of their personal credit portfolio.”

Demand for Credit

A parallel development, according to TransUnion, is the decline in consumer demand for credit. Taken together, the two indices reveal that consumers are focused on paying down existing debt balances rather than increasing their debt totals. TransUnion tracks the demand for credit with the Total Inquiry Index (TII). Compared to the TII in 2000, the 2011 TII came in at a historically low level. In turn, this means that the demand for credit by consumers is historically low. The decline of the index from the first quarter of 2011 to the second quarter however, is the slowest decline since the first quarter of 2008.

TransUnion indices seem to back up the results of numerous other surveys that have been unfolding over the years. Overall, it does appear as if consumers have learned their lessons about taking on too much debt in an uncertain financial environment. The result is that consumers are managing their current debt better and heeding the yellow caution flag about growing their debt balances.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Get 100,000 Bonus Points with the Radisson Rewards Premier Visa Signature

Posted: December 14, 2018

If you have been thinking about getting the Radisson Rewards Premier Visa Signature credit card, now might be the time to take another look because it now comes with 100,000 bonus points. This is a limited time offer, which is in play from ... Continue reading
Minor League Baseball and Allegiant Airlines Partner Up

Posted: December 13, 2018

Allegiant Airline and Minor League Baseball have inked a deal paving the way for a credit card partnership, one giving fans a credit card that reflects their fandom in terms of rewards whether they are traveling or catching a game. When ... Continue reading
Capital One Partners Up With Airlines

Posted: December 12, 2018

Capital One has partnered up with 14 airlines so that Venture and Spark cardholders can now use miles to pay for their flights. What is the transfer ratio? All of the carriers that have partnered up with Capital One, except for Emirates ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!