Consumer debt falls

A Federal Reserve study underscores that the recent improvements in the way consumers are handling their debts may actually have begun last year. The study demonstrated that the average amount of household debt consumers carried fell considerably between July and September.

According to the Federal Reserve Bank of New York and its quarterly report on debt and credit, total consumer indebtedness dipped by $60 billion during that time, dropping from $11.72 trillion in the second quarter to $11.66 trillion in the third quarter.

"The decline in outstanding consumer debt reveals that households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values," said Andrew Haughwout, vice president of research and statistics at the New York Fed. "However, our findings also provide evidence that consumer credit demand continues to increase, a positive sign for consumer sentiment."

The report based its analysis on several different categories of consumer debt, including mortgage balances, delinquencies and foreclosures. Credit card debt was also taken into consideration, which diminished by $6 million on a quarterly basis to total $383 million in the third quarter.

Occasionally, unfair credit reporting can make it appear as though individuals are behind on their debts when they're actually current on their payments. Consumers should be familiar with their financial histories so that problems like these can be addressed and quickly corrected.