Drop in household debt may signal improved consumer finances

U.S. household debt dropped in 2010 to $13.4 trillion, marking the second consecutive year the statistic has fallen, the Federal Reserve reported.

Consumers' recent improvement in their financial situations is partly the reason for the drop in household debt. Because of the recent recession, a number of families have focused on reducing their expenditures and putting more of their resources toward paying off their balances.

The net value of U.S. households increased about $2.1 trillion from the third quarter of 2010 to the fourth quarter, reaching $56.8 trillion. This is an increase of 6 percent from the last quarter of 2009, indicating consumers' finances are improving.

A number of individuals have been able to reduce their debt totals by reviewing their credit reports and finding out their current credit standing. Some consumers have even bumped up their credit scores, allowing them to qualify for lower rates on loans, essentially helping them to save money on their payments.

Credit repair may be an effective way for individuals to obtain a quick credit fix. By reviewing their credit reports, consumers may uncover a questionable or errant item that is unfairly hurting their credit. Working with a credit repair attorney to potentially remove these marks may help boost a credit score, and in turn, lead to money-saving interest rates.