Associated Press has posted an article about a record decrease in consumer borrowing for the month of July. Economic uncertainty and job losses have “prompted Americans to rein in their debt” by collectively cutting debt by $21.6 billion. Economists expected it to only drop about $4 billion.
The lagging economy is causing consumers to be more careful about the decision to apply for that extra credit card, but banks are also being more particular and are “clamping down on lending.”
Still, a report earlier this year by the company that produces the most widely known credit scores found that companies slashed limits for an estimated 58 million card holders in the 12 months ended in April, even though a high percentage had good credit scores when their limits were cut.
The cuts affected about a third of consumers, according to the study by FICO. But most people did not see a big impact on the credit scores because lenders often cut limits on cards that were unused or lightly used.
Ironically, the huge cutback on consumer spending has come at the same time Cash for Clunkers was introduced with the intent to boost spending and borrowing.
Given the current economic situation, debt collection and payment has become an important issue for many Americans. If you have had problems with debt collection, specifically creditor harrassment, feel free to contact us.