Consumers are Paying Less on Monthly Payments Than Three Years Ago

Experian, a leading global information services company, released its insights on average monthly payments* of the top 25 metropolitan areas. The study found that nationally, consumers are paying $903 per month on their bills, which could include a combination of credit cards, auto loans and leases, and mortgages—a decrease of two percent in the last three years.

The study also reveals that Washington D.C., Seattle and Baltimore top the list with the highest average monthly payments with Washington D.C. coming in at 42 percent higher than the national average. Cities with the lowest payments include Cleveland, Tampa and Pittsburgh .

"The trend we're seeing is that consumers have lower payments, indicating both proactive deleveraging by consumers and tighter limits from lenders and certainly consumers are making fewer major purchases than they were a few years ago," said Michele Raneri, senior director of analytics, Experian. "There are many ways to manage and develop a positive credit score and good payment habits. Paying bills on time is generally the single most important contributor."

Below are some tips for your clients to take into consideration when making a major purchase:

* Get your credit report. Before approving your request for a home loan, mortgage lenders review your credit report. If you review your credit report in advance, you'll see yourself from a lender's perspective.
* Be prepared. When lenders review your credit report, they evaluate how much you already owe, how much unused credit you have available, how prompt you are in paying your debts and whether you've recently applied for new credit.
* Count your savings. To buy a house, you generally need a down payment in the range of 5 percent to 20 percent of your new home's purchase price, depending on your credit risk. You also need money for closing costs and be sure to set aside extra funds for emergencies. If you spend everything on your down payment, you're statistically more likely to lose your new home to foreclosure sometime in the future.
* Make your payments. How much you borrow, how much you owe and when you pay become a part of your credit history. When you apply for new credit purchases, other lenders will review this history. Late payments can stay on your credit report for up to seven years, can keep you from buying another house or can make it more expensive to buy a car. A good credit history proves that you manage your finances well. It lets you enjoy using credit at your convenience and at a lower cost.