Recent reports have left some experts hopeful and others skeptical. Credit card debt decreases indicate that Americans have a handle on their finances, yet a drop in credit score averages may indicate we aren’t out of the woods yet.

Although it is good that there are less consumers in debt, it is hard to say whether or not this is a indicator of economic improvement. The reality is: due to the unstable market the past few years, consumers have been forced to tailor their spending and saving habits to the economic climate.

So, the decrease in debt may not be attributed to being able to pay off debt as much as it to an increasing emphasis on frugality. There have even been reports that consumers are moving away from using credit cards all together.

According to research done by, credit card debt amongst consumers decreased by 8% nationally to $7,404. The research was released under the company’s U.S. Credit Score Climate Report for December 2010. Consumers in eight states have even paid off more credit card debt than the national average (8%) since January 2010.

StateAmount of Credit Paid Off
California,Colorado, Connecticut, Indiana, Oklahoma, Tennessee9%

These findings also report on the “average consumer with an account” in 2010.

StateAmount of Credit Paid OffProduct+/- Percent ChangeDollar Amount
California,Colorado, Connecticut, Indiana, Oklahoma, Tennessee9%Home Mortgage Loans- 4%$173,340
Home Equity- 4%$49,803
Auto Loans4%$15,274
Student Loans10%$29,016

As Debt Declines, so do Credit Scores

However, not all the news is sunny as credit scores are down one point nationally at 668 since the beginning of the year. Consumers in six metropolitan areas have seen a credit score decline greater than the national average since January 2010. Credit scores decreased two points in Chicago, Houston and New York City, three points in Los Angeles and San Francisco, and four points in Philadelphia.

Other key findings delineate the credit scores of various states. Massachusetts and New Jersey have the highest credit scores nationally with an average score of 686. Arkansas on the other hand has the lowest credit scores nationally with an average credit score of 641. The lowest national credit scores belong to six states who currently hold fair to poor (650 or lower) credit scores: Alabama, Arkansas, Kentucky, Louisiana, Oklahoma and South Carolina. Although included in the bottom six, Louisiana saw the largest credit score change since January 2010, which rose eight points from 639 to 647 in December 2010.

Bottom Line

Each month, compiles a U.S. Consumer Credit Score Climate Report, which compares the current credit scores of its user base with previous scores pulled between 30 and 90 days prior to the stated month. This month’s report includes a comparison of more than 157,588 user scores. Ken Lin, the CEO of, said it would seem towards the end of 2010, credit scores stabilized and consumers made greater efforts to pay down their debt.

Find some tips here on how to improve your credit score.

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  • C L Jones

    The US Consumer Market is controlled by Credit Scoring as a possible indicator of failure to pay obligations. This is not true and still the economic specialist alllow for Credit Repositories to continue this political, and financial blackmail that does no more than hurt business rather than the old fashion way of trusting the consumer and making wise choices in lending practices where scores had not major effect.
    Lenders developed relationships with business owners, consumers allowing them to start small and grow as debt was paid back so the debtor proved his or her ability to pay bills. Consumers should not be held captive to GREED by Credit Card companies, mortgage holders and subprime lenders as a result of alleged credit scores. This hurts the economy rather than improving.
    If every business and the US government had to fall prey to the terroist tactics using the CRA’s alleged credit scoring models then they would be better able to understand as suggested.
    To pay U.S. debt there must be tax revenues and private investment to meet these obligations.
    To generate tax revenues and private investment there needs to be employment opportunity for those unemployed to work and contribute to economic growth.
    There needs to be a hault on foreign outsourcing and investment until such time as the U.S. economy stabalizes a minimum of two to three years.
    There needs to be an elimination of an alleged controller of the house of representatives, congress and senate and support the advisement of the President elected by the people. Behnor is wrong and should be removed from the House and stop trying to run the country he is not the President.