If an American applies for credit, he is very likely to be turned down, according to a survey by the US Federal Reserve. This is evident due to the presence of high-interest rates and caution among various lenders in the country.
In June 2023, the rate of loan rejection jumped to 21.8% in the last twelve months. This data came from a Fed survey which gets published every four months. Furthermore, as per the data, credit applications also declined to its lowest level since October 2020.
The last survey was published in February when the rejection rate of loans was 17.3%. This was before the collapse of Silicon Valley Bank and other US lenders.
The increase in the rate of rejection is broad-based across various age groups. Applicants with a high rejection rate were the ones with credit scores below 680 units.
USA Today reports here –
“Rejection rates for credit cards, credit card limit increase requests, mortgages, and mortgage refinance applications rose to 21.5%, 30.7%, 13.2%, and 20.8%, respectively, the Fed said.”
One of the most interesting factors that turned many eyes was that there had been an increase in rejection rates for auto loans.
According to Bloomberg,
“What’s more, almost one-third of auto-loan applicants expected that their loan would be rejected, a record high. There were also steep increases in reported expectations that requests for new mortgages, mortgage refinancing or increases in credit-card limits would be turned down.”
Since the survey began in 2013, the rejection rate exceeded the application rate, as the former increased from 9.1% to 14.2%.
A passionate writer and an avid reader, Soumava is academically inclined and loves writing on topics requiring deep research. Having 3+ years of experience, Soumava also loves writing blogs in other domains, including digital marketing, business, technology, travel, and sports.