Consumer credit resolving faster than expected

Though many financial experts believed it would be several years before Americans were able to restore their bad credit situation after the mortgage meltdown, good credit scores are becoming more and more commonplace, according to Bloomberg Businessweek.

"The financial situation of the household sector has improved far faster than everyone thought it would two years ago," said James Paulsen, chief investment strategist for the Minneapolis-based investment firm Wells Capital Management. "People are still locked into the view that consumers are facing record burdens, and they are not."

According to data the source collected from the Federal Reserve Bank of New York, consumer debt has fallen by more than $1 trillion since March, and a greater number of homeowners are spending a smaller percentage of their annual incomes on debt payments. For instance, before the recession began, Americans spent 19 percent of their earnings on debt, compared to 16 percent today.

Economist Dean Maki tells Bloomberg the growth in credit is reflective of consumers being more optimistic about their income prospects.

It may also result from consumers meeting with credit repair companies, who may have been able to identify inaccuracies on their credit reports. This can help restore their score and make them an ideal lending candidate.