As the economy continues to stabilize, more Americans are experiencing improvement in credit application rates and credit rejection rates, including those of mortgages and mortgage refinances, reports the Federal Reserve Bank of New York. According to the Bank’s recent SCE Credit Access Survey, there are now more successful applicants and fewer rejected and discouraged credit seekers. Thirty-four percent of survey respondents who were credit applicants in the last 12 months were granted credit; a mere 8.1 percent applied and were rejected. Approximately five percent of survey respondents were too discouraged to apply, despite indicating a need for credit.
Application rates increased slightly for all credit types: mortgage, mortgage refinance, credit card, credit card limit increase and auto loan. The most noticeable increase was seen in those aged 40 or younger.
In addition, survey respondents reporting a voluntary credit account closing or credit limit reduction in the past 12 months dropped to 13 percent. Involuntary (lender-initiated) credit account closings or credit limit reductions remained within the 3-4 percent range seen at the onset of the recovery.
Survey respondents indicating the likelihood of applying for a mortgage in the next 12 months increased to record highs. The likelihood of a credit application being rejected, conditional on applying, fell for mortgages and increased slightly for mortgage refinances.
Source: Federal Reserve Bank of New York