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A new report from Equifax shows that credit in America has risen to a six-year high. I’m a proponent of maintaining healthy credit, and at first blush this report may seem a little shocking and worrisome. This is why I decided to dig into it a little deeper and share my thoughts with you. Yes, on the surface the fact that more Americans are getting more credit may seem like something to be concerned about, but it can also signal greater health and financial optimism among our nation’s consumers. Here’s why I say that.
First of all, if more consumers are able to get credit, especially in this more stringent lending environment, it likely means their financial health is improving, they’ve got employment and they are poised to spend some money.
Let’s take a closer look at the section reporting on bank-issued credit cards, which experienced the greatest percentage of growth as a vertical. It reveals the following:
Yes, although our economic recovery has been slow, I frequently see signs that it is continuing to improve step by step, and this report seems to confirm that. However, as I always say, make sure you are taking responsibility for your finances and making a habit of practicing healthy credit behaviors.
That means: Pay your bills on time, and if possible, don’t charge any more than you can pay off each month, or if you carry a balance, try to keep it less than 30% (or better yet under 10%) of your available credit. These practices will help you keep your debt under control, as well as contribute to a stronger credit score over time. Checking your credit reports and credit scores regularly can also keep you in touch with your credit health, so you can spot errors, signs of fraud, or problems that you need to work on. You can check your free annual credit reports from each of the three major credit reporting agencies, and you can check your credit scores for free every month through Credit.com.
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.
Image: psphotograph
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