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Are lenders and consumers concerned about credit risk?

By Ellen Cannon · Bankrate.com
Saturday, May 29, 2010
Posted: 8 am ET

Two studies released in the past week or so paint different pictures about credit risk, lenders and consumers.

A FICO survey done by the Professional Risk Managers' International Association showed that 59 percent of lenders are still concerned about credit card delinquencies. A Moody's study released this week found that credit card charge-offs were down to 10.91 percent in April, compared with 11.21 percent in March. That's the sixth month in a row that credit card delinquencies have declined.

And the Federal Reserve's monthly report on consumer credit -- the G.19 -- shows that revolving credit -- credit cards -- has been declining every month since 2008. From the first quarter of 2009 through February 2010, American consumers have cut their revolving debt by $79.3 billion.

So if the statistics say delinquencies and debt are going down, how come bankers are nervous?

The chief research officer at FICO, Andrew Jennings, Ph.D., said some of the concern is attributed to the CARD Act. "Throw in the CARD Act, which makes it harder for lenders to rein in risky cardholders, and it becomes highly unlikely we'll see lender throw caution to the wind."

Still, I think it's a good sign that consumers are getting serious about their debt and seem to be managing their credit cards more responsibly. They seem to be concerned about their own credit risk. One thing cardholders can do to help pay down debt is to find a new card with a better interest rate.

What are you doing to control your credit risk?

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