The average credit rating and score rose with the latter touching 704 in July. This level hasn`t been seen since the 1st quarter of 2008 as per the data provided by Equifax, which is one of the biggest credit bureaus in the country. This also means that lenders now consider the consumers as less risky and would be more than happy to have more of them as their customers. However, according to an Equifax executive, more and more customers seem to think that debt is way too risky. Although traditionally, customers were the engine for economic growth after an economic recession it isn`t the case this time around.
This data is based on the massive database of files of consumers using credit in US. The number exceeds more than 200 millions. This credit risk score also predicts the chance of a consumer falling behind on a debt by more than 90 days. The highest such score is 850 and the higher the score, the less the chances of the borrower to fall behind in terms of repayment of the debt. Also the rise in credit scores indicates a decline in debt too. The total debt of the consumers which is outstanding is currently at 10.8 trillion dollars down from the peaking point in October 2008 when it touched 11.5 trillion dollars. This debt includes credit cards as well as mortgages.
The rate of savings meanwhile has risen from 6.3% in May to 6.4% to reach the highest point since the middle of last year. It remains to be seen if all this saved money comes back into the economy. This amazing reluctance of the consumers to take debt and spend is unmatched in recent times. However, many predict that this reluctance will only disappear and the upward trend would be back after the unemployment comes own and the values of homes show some stability. However, unemployment numbers are not likely to drop in the near future.
Meanwhile it is also interesting to note that the US consumers are saving their resources instead of spending on items. There aren`t many everyday indulgences either. The revolving balances on credit cards issued by banks have fallen back to the levels that they were at way back in 2005 which is 716.9 billion dollars from a peak of 835.7 billion dollars in October of 2008. These balances reflect whether the customers are spending outside and it doesn`t look like they have enough confidence.