Consumer credit activity hits new record in June

In what is interpreted by experts as a positive sign for the U.S. economy, total consumer borrowing hit a record $3.42 trillion in June, based on data released by the Federal Reserve. This represented an additional $20.7 billion in debt taken on by consumers that month, not including new mortgages. This significantly exceeded previous estimates of $16.5 from economists surveyed by The Wall Street Journal. 

These figures show that Americans are feeling more comfortable with their finances, and are more confident about taking out loans to facilitate large purchases. Non-revolving debt, such as that for college tuition and car loans, increased by $15.2 billion, the largest gain in the past three months. Revolving debt, which includes the use of credit cards, rose by $5.5 billion, buoyed by vacation spending and falling unemployment. 

"Job gains and an improvement in household balance sheets since the last recession are making Americans more comfortable about using credit cards and taking out loans for big-ticket goods such as new cars," Bloomberg reports. "The pickup in June borrowing points to sustained consumer spending that will help bolster the economy in the second half of 2015."

The source predicts that the American economy will expand at an annual rate of 3 percent going into the second half of the year, with consumer spending accounting for 70 percent of economic activity. With consumer debt up 6.5 percent from the start of 2015, it seems like many Americans are scaling up their borrowing, with experts predicting a continuation of this trend in the months to come. 

Although Americans are feeling more confident about their ability to repay a loan, many remain "credit invisible," meaning traditional credit scoring solutions won't be able to provide an accurate idea of creditworthiness, even if the borrower has been reliably paying their debt obligations for years. Advanced application processing software that recognized this fact and using alternative data sources to offer a more complete picture of borrowers' propensity to repay, allowing institutions to better capitalize on increasing loan demand. 

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