There may be no better indication of the health of the economy than the attitudes of consumers and institutions regarding debt. During the recession, consumers were frantically paying down debt and institutions showed little interest in extending credit. All that is about to change this year.
Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs, believes that “2013 could be the year that Americans begin to embrace credit again.” The latest FICO survey shows that 61% of bankers expect consumers to increase their credit lines and to request new credit in the next 6 months. Nearly the same number, 59%, predict that consumers will begin to run up their credit card balances. The improved attitude is linked to confidence regarding employment and also to the feeling that more consumers believe their debt is under control.
Financial services professionals say they’ll be able to meet demand for credit as follows:
- Car loans 74%
- Credit cards 71%
- Student loans 68%
- Mortgage refinancing 61%
- Small business loans 53%
- New mortgages 53%
With consumers ready to take on debt again, credit card companies, in particular, are likely to start rolling out their best offers. Bankers say they want consumers to be prudent with respect to incurring debt, but they also know that financing the debt is a profitable source of revenue.[Source: FICO Survey: U.S. Household Deleveraging May Be Coming to an End. PRMIA.org. 10 Jan. 2013. Web. 25 Jan. 2013]