He found a lower-paying job at ClearPoint Credit Counseling Solutions -- and made ends meet through ways like subletting rooms in his home. Now earning as much as he was five years ago, Nitzsche has been able to cut his debt load by about 28 percent and is whittling down his home and student loans. He even took out a $5,000 loan to buy a used, 17-foot ski boat over the summer.

Positive Step

Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, says it’s a positive step for the economy when consumers feel confident enough to borrow money.

“It’s all about a hand-off,” said Dutta. “We’re entering the next phase of the deleveraging process where the government de-levers and the private sector begins to re-lever.”

Forty-six percent of U.S. and Canadian bankers surveyed project new consumer credit requested will increase over the next six months, according to a report published Oct. 9 by credit-risk grader Fair Isaac Corp., which produces the FICO score. Some 53 percent of lenders estimate credit-card balances will increase during the period.

The average FICO score of all closed home loans fell to 732 in September from 750 the year before, according to data from Ellie Mae Inc., the provider of software used by mortgage lenders to make home loans. Declines in the average score may mean credit is more accessible or it may indicate increased demand by mid-level borrowers.

Falling foreclosures, bankruptcies and defaults on consumer loans all point to improved balance sheets as the economy continues to expand.

Home-foreclosure filings fell to about 129,000 in August, down 65 percent from a peak of about 367,000 in March 2010, according to data from Realty Trac Inc.

The number of non-business bankruptcies in the 12 months ended September fell to 1.07 million from the 1.54 million reached during the same period in 2010, according to data from the U.S. Courts. The national composite consumer-credit default rate was 1.38 percent in September, compared with the 5.51 percent peak reached in May 2009, according to an S&P/Experian index.

Eager Lenders