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Americans to take on more credit

By Janna Herron ·
Friday, January 11, 2013
Posted: 4 pm ET

Lenders expect more consumers to apply for credit, increase credit limits and carry bigger credit card balances in the first half of this year, according to a survey of bank executives released by FICO.

More than 6 in 10 bankers -- 61 percent -- said there will be an uptick in the number of requests for credit line increases and the amount of applications for new credit. Those are the highest levels in almost three years, the creator of the most common credit score said.

Almost the same percentage of bankers, 59 percent, believes credit card debt will rise. That's the second-highest level since the beginning of 2010.

The predictions suggest that consumers are making big changes to the way they handle their finances. During the Great Recession, Americans were mostly focused on reducing debts. This could mean that U.S. consumers are feeling better about their financial security.

"It appears that the job market is starting to bounce back, and the housing market is looking more optimistic," says Joanne Gaskin, a senior director at FICO. "Overall, there is more confidence in the future and this translates into a willingness to take on more debt. Hopefully this is good news for the economy."

Still, lenders want consumers to remain fiscally responsible. More than 7 in 10 bankers believe Americans should either save money or pay off debts. Just over a fifth of bankers would advise consumers to take advantage of low interest rates and borrow for big purchases, while 1 in 10 said consumers should maximize their available credit.

"When taking on more credit, consumers should always be thinking about maintaining their FICO scores by paying their bills consistently, as agreed, and on time," Gaskin says.

FICO's survey polled 251 risk managers at U.S. banks in December. The survey results were released Thursday.

Follow me on Twitter: @JannaHerron

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The OC
January 15, 2013 at 1:08 am

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