Expert on consumer credit laws and regulations.
Chances are it was a little harder to get a new credit card in the second quarter of 2018 – particularly for people with less-than-perfect credit.
Senior loan officers surveyed by the Federal Reserve said they tightened their standards for credit card applicants more often than they loosened them.
The Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices asked 72 U.S. banks plus 22 branches of foreign banks about their willingness to give credit – to consumers, companies and real estate projects.
“A moderate net percentage of banks reported tightening standards on credit card loans over the past three months,” the survey said, “while standards on auto and other consumer loans were reportedly little changed on net.”
The modest rebuff to credit card applicants comes at a time when credit card balances and defaults are rising.
See related: New card accounts show rare decline, banks say
Tighter grip on cards
Of the 50 banks who answered the question about lending standards for credit cards:
- Nine said they “tightened somewhat.”
- Three said they “eased somewhat.”
- Most – 38 – said their standards were “basically unchanged” during the April-through-June period.
Asked about their minimum required credit scores,
- Five banks said they “tightened somewhat.”
- Two said they “eased somewhat.”
- 39 said the minimum score remained basically unchanged.
When asked about their stance toward applicants who did not meet credit score thresholds, three banks said they tightened up on their standards, while one said it eased somewhat.
Slightly more banks also said they raised credit limits and interest rates than lowered them.
Banks’ stance tighter for subprime borrowers
The latest edition of the survey included a section looking at long-term trends in consumer lending. When asked where their stance on cards is now, compared to the range of standards since 2005, banks had sharply different answers depending on the borrower’s credit posture.
- For prime borrowers, 12 banks said standards were “somewhat easier” than the midpoint for the range, while eight said standards are somewhat tighter, one said they are “significantly tighter” and one said they are “near the highest level.” Thirty banks said standards now are near the midpoint of the range.
- For subprime borrowers, four banks said standards were “somewhat easier” than the midpoint, three said they were somewhat tighter, six said significantly tighter, and eight said lending standards now are “near the highest level.”
- Sixteen banks said standards are near the midpoint of the range.