A new survey from the New York Federal Reserve indicates that U.S. consumers are growing increasingly pessimistic about their ability to access most forms of credit. You can read the Fed survey here. While the Fed survey focuses on insecurity around home mortgages and vehicle financing, it reinforces a recent Bankrate reportthat examined the broader consumer credit market.
The upshot of both: American consumers who may need access to some form of credit in a time of greater economic fragility are finding it tougher to qualify for that financial breathing room. And if your credit score is less than perfect? It’s becoming even tougher. From Bankrate:
Americans with lower credit scores are facing significantly higher rejection rates, Bankrate’s poll found. More than 7 in 10 applicants with “poor” credit based on FICO’s ratings (73 percent of those with scores in the 300-579 range) have been denied at least one loan or financial product since the Fed raised rates. Almost two-thirds (63 percent) of those with “fair” credit (580-669) have faced a denial.
Meanwhile, more than half of applicants with “good” credit (55 percent for those in the 670-739 range) have been denied a loan or financial product — still higher than the national rejection rate in Bankrate’s survey.
As we have noted, the ongoing economic uncertainty is a significant influencer on credit availability. But so, too, are bank and non-bank lenders’ assessment of the risks and regulatory environment they must operate in. In a time when many consumers are looking to use credit as a financial tool, the Consumer Financial Protection Bureau should be looking to set clear rules of the road that increases certainty for lenders and borrowers alike.
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