Americans who are looking to start off the new year by taking steps toward achieving great credit scores are attempting to take the necessary actions to keep their resolutions.
According to the recently released FICO quarterly survey of U.S. bank risk professionals, a significant number of bankers reported consumers will be applying for more new credit and trying to increase the limit on their current credit cards over the next several months. The survey was conducted for FICO by the Professional Managers' International Association, finding bankers are also expecting balances on credit cards will increase in the first half of the new year.
The survey also showed that household deleveraging in the country may come to an end soon. Deleveraging refers to the reduction of the percentage of debt in the balance sheet of a single economic entity, such as a household. Deleveraging typically occurs after a market downturn and is driven by the need to cover loss.
"These results indicate that 2013 could be the year that Americans begin to embrace credit again, after the considerable deleveraging we've seen since 2008," said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. "With both the job market and real estate sector showing signs of life, American consumers may again be willing to fund their lifestyles by taking on more debt. And it appears that banks are willing to oblige."
Americans expect credit line increases
The survey also found that 61 percent of bankers expect a boost in the number of requests for credit line increases over the next six months. Sixty-one percent of respondents to the survey also reported that they expect the amount of new credit requested by Americans to increase during the same period of time.
Considering Americans are planning on opening new lines of credit and increasing their limits, consumers should make sure they follow spending habits that will save them money and keep their credit scores in the best condition in the future.
Americans should make sure they have a basic savings account set up for the new year, as saving money can be more beneficial when you need to pay a credit card bill. Paying bills on time is a significant portion of improving credit scores, but the Consumer Protection Bureau recently revealed credit card use is the biggest factor that is used to determine an overall credit score. With credit card use being so important, Americans should make sure they are mindful of the effects different lines of credit can have on their FICO scores.
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