For the fourth consecutive quarter, TransUnion's Credit Risk Index (CRI) declined - indicating consumers were less of a credit risk in 2010 compared with the previous year, the Chicago-based credit bureau reports.

The CRI decreased 0.9% in the fourth quarter ended Dec. 31 and stands at 125.61. It dropped 118 basis points (125.61 from 126.79), pushing it to a risk level not experienced in the U.S. since the fourth quarter of 2008. On a year-to-year basis, the CRI stands 3.13% lower than it did at the end of the fourth quarter of 2009.

Forty-nine states and the District of Columbia experienced declines in their credit risk indices by the end of the fourth quarter ended Dec. 31, a sign that a broad improvement in consumer credit conditions is taking root.

The ranking of states with the highest CRI remained the same in the fourth quarter with Nevada (162.09) slightly ahead of Mississippi (160.33) and Texas (157.65). In line with previous quarters, the least risky states are concentrated in the Upper Midwest - with North Dakota coming in at 79.76 and Minnesota at 88.96.

"The gradual decline in the [CRI], coupled with a 5.4% decrease in the demand for credit over the previous year, as reflected in TransUnion's Total Inquiry Index (TII), suggests that consumers are relying more on existing credit or switching to cash or debit cards," says Chet Wiermanski, global chief scientist at TransUnion. "While more consumers will have stronger credit profiles making them attractive to credit marketers, the underlying demand for credit appears to still be soft."

The TII decreased to 67.6 in the fourth quarter ended Dec. 31. According to TransUnion, this is significant because the decline in the demand for credit has slowed to 5.7% between Q4 2009 and Q4 2010 after experiencing declines of 16.5% between Q4 2007 and Q4 2008 and 19.3% between Q4 2008 and Q4 2009. The TII is benchmarked to credit inquiry levels generated by consumers seeking credit in 2000.

The TII declined in 42 states and the District of Columbia during the fourth quarter ended Dec. 31. Alaska, Vermont and Wyoming were the top three states showing the greatest quarterly jump in credit demand. Florida, Nevada, and Virginia were the top three states showing the greatest decrease.

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