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January 1, 2006 — For the second month in a row, the Experian-Gallup Personal Credit Index is on the rise, up seven points from last month's level of 85. At 92, it's down only eight points from the benchmark level of 100 established in March of 2005. The survey's results indicate that consumers are particularly positive about the future-especially when it comes to reducing debt over the next six months-quite a turnaround from only two months earlier when the Personal Credit Index hit an all-time low of 74.
Twenty-three percent of the consumers surveyed responded that they made, or expect to make, New Year's resolutions having to do with finances. While this percentage may seem on the low side at first, given the seemingly never-ending struggle by most Americans to improve their financial situations, it's up from last year. Only 9% of the same respondents report making any resolutions regarding finances for New Year's 2005.
Focusing on Debt
While this month's survey results indicate that 77% of Americans are comfortable with their level of credit card debt, most consumers still plan to take steps to reduce their debt levels.
- 84% say they are likely to reduce credit card debt in 2006
- 7% have a more pessimistic outlook, believing it's "not at all likely" they'll reduce credit card debt
When it comes to reducing overall debt, consumers are a bit less confident in their abilities.
- 47% say it's "very likely" they'll be able to reduce their overall debt
- 25% think their likelihood is "somewhat likely"
- 8% claim it's "not too likely," with only 11% rating their chances as "not at all likely"
Other Steps to a More Prosperous 'O6
Concentrating on debt isn't the only way consumers plan to improve their financial situations in the coming year. This month's survey results also reveal they're prepared to make personal sacrifices and personal improvements:
- 23% are "very likely" to cut back on spending for entertainment purposes
- 20% are "very likely" to read a book or take a course on personal finances
- 19% are "very likely" to cut down on the number of credit cards they have
Complacent When it Comes to Credit Ratings?
One in four (28%) consumers is "very likely" to check his or her credit score this year, an action that does not, contrary to the erroneous beliefs of many, lower one's credit score. One in three consumers (34%) plan to take steps to improve their credit rating, with 64% of those surveyed stating they're satisfied with their current credit rating, and 1% responding that they don't even know what a credit rating is.
Among consumers who plan to improve their credit rating, achieving that goal does not appear to be a prerequisite to their happiness:
- Only 17% say their happiness is dependent upon improving their credit rating
- 52% say it's very important, but not crucial to their happiness
- 4% say it's of only minor importance
Success or Regrets?
Finally, the question on the minds of cynics everywhere this time of year: What's the likelihood of consumers actually succeeding in seeing their financial resolutions through? An impressive 89% of those who plan to make a financial resolution expect to keep it. But are their predictions overly optimistic or based on past successes? According to those who made financial resolutions last year, 82% claim to have successfully kept them, suggesting success for the vast majority. For the rest, there's always next year.
About the Experian-Gallup Personal Credit Index
The Experian-Gallup Personal Credit Index is a monthly survey among a nationally representative sample of 1,000+ respondents, focusing on consumers' ever-changing attitudes and perceptions relating to their current credit situation and future expectations. Specific areas of inquiry include debt load, credit score, borrowing, and repayment ability. The survey's margin of error is +/- 3%.
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Consumer Optimism Rises in the New Year
Experian-Gallup Personal Credit Index Rises to 92 — Higher than December 2005
- Consumers are more confident about the future and many plan on reducing their debt in the next six months.
About 1-in-4 Will Make a New Years' Resolution to Improve their Finances in 2006
Percent of Americans Able to Keep Their New Years Resolution to Improve their Finances in 2005:
Only 28% of Americans Plan to Check Their Credit Score in 2006
% of Americans are very likely to do the following in 2006:
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