Consumers began taking charge of their credit last year, and the charts are reflecting it. Recent data shows that U.S. proprietary Insurance Risk Index continues to decline, and may in fact be at an all-time low. Translated in layman’s terms, the average U.S. consumer is pursuing better debt management.

“In our studies we’ve noticed a trend over the last two years, where consumers have made concerted efforts to pay their credit card obligations on time and reduce their debt,” said a www.Credit-Land.com analyst.

American Debt Management has come to the same conclusions, “more people are staying out of debt, and trying to make more than the minimum balance. People enjoy not being a slave to debt,” said Barbara Starke of American Debt Management.

TransUnion’s Insurance Risk Index for Quarter 4 2010 stands at 99.13, which is three points lower than Quarter 3 2010, and 18 points lower than 2009′s Quarter 4. Over the past two years the vast majority states have experienced a decrease in the Insurance Risk Index.

The index is determined by consumers’ effort to pay their credit obligations on time and reducing debt. These factors combined together are very important in determining insurance risk scores. The lower the index, the more consumers have been actively trying and succeeding in reducing their debt. The length and stability of responsible credit payments causes the insurance risk models decline. But analysts worry that this data reflects only part of the trend, as it may seem that 2011′s time low Insurance Risk Index may rise fairly soon.

Because consumers felt comfortable with their credit and debt management last year, bigger purchases such as cars and furniture were very common. General Motor car purchases rose 21 percent during the fourth quarter last year. Car purchases are reflected on credit reports as installment credits. Installments credits are starting to appear on more consumer credit reports, along with rising levels of debt.

“With increased activity and levels of installment debt, more consumers may potentially have lower insurance risk scores, adversely impacting the IRI,” said TransUnion’s Geoff Hakel in a press release, group vice president of TransUnion’s insurance business unit, don’t know if they are a competitor.” The stable and relatively low loss ratios insurance providers have experienced over the past several years may be coming to an end. This may be an excellent time for insurers to re-examine their portfolios and prepare now to effectively mitigate any risks associated with higher replacement costs associated with damaged property and autos,” he said.

The above article was contributed by the Credit Land website, which features credit card selection and application assistance. You can learn more by visiting http://www.credit-land.com.

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