Consumer credit risk declines for first time in five quarters
An index that attempts to measure consumer credit risk declined during the first quarter, indicating the economy may be on the mend.
TransUnion reported credit risk fell from 129.67 to 128.82 in the first quarter of 2010. That marks the first decline the company has seen in the index in five quarters.
Chet Wiermanski, the firm’s global chief scientist, said consumers may be more reluctant to take on additional debt obligations, which could include credit cards. He said people are also making efforts to stay current on the amounts they already owe.
“After experiencing one of the most tumultuous economic periods since the Great Depression, it is possible that consumers may be reluctant to take on significant debt in the near future, which could possibly temper an economic recovery,” Wiermanski said.
According to the Federal Reserve Board, borrowers managed to pay off more of their credit card debt last year, as revolving consumer credit declined 9.6 percent. However, this could also be an indication that companies had to write off more debt, which may make them reluctant to offer credit cards and home loans.
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