Outstanding Consumer Credit Falls

Outstanding consumer credit continues to take a hit in this economy. For the seventh straight month, the August numbers for outstanding consumer credit showed a decline. This means that fewer people are getting new credit, and some are even paying down what they owe. Indeed, one of the biggest reasons that outstanding debt has fallen by $12 billion is that people have been paying down their credit cards. And that is a very encouraging sign.

Credit restrictions limit credit acquisition

The other side to this, of course, that credit is not growing. Lenders are imposing stricter credit standards on potential customers. Credit requirements, as well as income requirements, are tougher than they have been for years. This means that many people are being turned down for new lines of credit.

This is not necessarily a bad thing. One of the reasons we are in this mess is due to the ease of credit. When anyone with a pulse — including kids — can get a credit card, you know there is something wrong. The idea that you have to prove yourself responsible and able to make payments is a good one, and one that seems to be making a reappearance.

The next question is this: How long will this new found credit prudence last?

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