February 22 to March 1 is America Saves Week, which is sponsored by more than 100 companies, including Experian. You might wonder what saving has to do with credit, and the answer is a lot, especially in today’s difficult financial times.
Recent data gathered by Experian®, showed that the average debt of U.S. consumers is steadily increasing. As of December 2008, the average debt was $17,157 per person, up $576 from the same month last year. Now more than ever, consumers are tapping into their savings and using credit to finance their lifestyles, causing their debt to mount.
Yet, saving is essential to maintaining good credit. Not having savings for unexpected expenses can lead to an increase in debt, late payments or inability to pay your debts. In turn, that can lead to increased fees, and difficulty in acquiring new credit. With a higher debt utilization ratio, consumers are more likely to be considered high-risk by lenders, which can make it more difficult to acquire new loans, such as for a car or a home.
Current economic conditions have highlighted the need for financial education surrounding credit and savings. During America Saves Week Americans will be encouraged to increase their savings activities. You can find many savings tips, tools, public service announcements, and saver stories on the America Saves Week Web site, http://www.americasavesweek.org/.
You can find more about how to manage your credit in my previous columns and in the credit education pages at www.experian.com.
Thanks for reading.
- The “Ask Experian” team