Consumer Credit Index

We have often said that credit counseling agencies are well positioned to supplement what is known about credit quality, by virtue of their in-depth interviews with several million financially troubled borrowers each year. The trick is to develop consistent measures of either the causes or symptoms of overextension that can be tracked over time. The Cambridge Credit Counseling Corp. (Islandia, NY) is a credit counseling organization that is making one such attempt. The agency has been surveying a random sample of at least 1,000 households each month. The purpose of the survey is to ascertain whether consumers are planning to add to or reduce their debts. From the responses, the company has developed an index of borrowing attitudes. The higher the index, the more "debt prone" are the respondents. The April survey asks the following questions:

1. "In the past month, have you taken on more debt or paid off debt?" In response to this question, among those with debt, 46% more respondents reduced (paid off) debt than added debt.

2. "In the next month, do you anticipate taking on more debt or paying off debt?" Sixty-four percent more respondents plan to pay off some of their debts rather than add to them.

3. "In the next six months, do you expect to take on debt because you are thinking of making a major purchase such as education, appliance, medical procedure, furniture, or carpeting?"

Source: Cambridge Consumer Counseling Corp.

This past month, Cambridge also did a special survey of its clients asking: "What was the main reason or recent event that made you realize you need help with your unsecured debt?" Cambridge obtained 1,683 responses. The most common responses are listed below.