New York Federal Reserve Reports Surge in Credit Application Rejections

The New York Fed said that the overall rejection rate for credit applicants in June 2023 rose to its highest level since June 2018. Comstock Images/Getty Images

The New York Federal Reserve Bank said more Americans had their credit applications rejected last month at levels not seen in years.

The New York Fed reported on July 16 added that fewer people across the country also sought to borrow.

The report was part of the bank’s monthly Survey of Consumer Expectations, which is taken every four months to assess credit access issues in the United States.

The New York Fed reported that the overall rejection rate for credit applicants rose to its highest level since June 2018, standing at 21.8 percent, a jump from 17.3 percent in February.

Researchers noted that the rise in the application rejection rate “was broad-based across age groups and highest among those with credit scores below 680.”

Rejection rates for auto loans came in at 14.2 percent from 9.1 percent in February, the highest on record since 2013, while rising for credit card applications, credit card limit increase requests, mortgages, and mortgage refinance requests, at 21.5 percent, 30.7 percent, 13.2 percent, and 20.8 percent, respectively.

The survey noted that the average probability that a loan would be rejected “sharply” increased to record levels for auto loans, credit cards, credit limit increases, and housing-related credit.

However, consumer lending rates have remained relatively stable, despite some signs of slowing down from its peak in October 2022.

The Fed survey found that the application rate for credit over the past 12 months modestly declined to 40.3 percent from 40.9 percent in February, its lowest reading since October 2020.