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Here's Why The Credit Picture Isn't All Bad

Consumer-credit delinquencies are on the rise again, but that doesn't mean the consumer credit picture is worsening, according to FICO CEO Mark Greene.

"We’re sort of tentative and cautious," Greene said in an interview with CNBC.

"Our view at FICO is we probably have 2011 as another year of working through these issues, particularly on the housing side—the mortgage industry is the one we’re most troubled by at the moment—and we are probably into 2012 before we see clear signs of recovery, so this is a period of tentative recovery at this time," Greene said.

Despite the increase in credit-card delinquencies in the third quarter, Greene expects that credit quality has been improving overall.

He explained that many people have focused on consumers with lower credit scores, many of whom have seen their credit scores worsen as job loss and a poor economy have hurt their ability to repay consumer loans.

However, FICO also has seen those with higher credit scores experience further improvement in their credit quality as they tightened their belts and paid off debt during the economic downturn.

In other words, credit scores continued to push both higher on the top and lower on the bottom.

And those on the lower side of the spectrum will likely become more aware of their situation in the coming months. Consumers will see the impact of their credit scores more closely in the coming year. In the wake of the recent changes credit card regulations, banks and other lenders will have to explain to consumers what criteria was used to determine that why they either did not receive credit or received a higher interest rate due to being a credit risk.

FICO recently put up a new Web site to explain these changes, Greene said.

This change should not have a negative impact on FICO's business because banks will still need to pay the company to receive credit score information, he added.

Questions? Comments? Email us at consumernation@cnbc.com

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