If you’re applying for credit for a car or a card for a new purchase, it may be more difficult than you expect.
A Federal Reserve Bank of New York The survey found that the rejection rate for credit applicants rose to 21.8% in June, the highest in five years.
According to the report, the increase in rejection rates hit people with credit scores below 680 the most.
The auto loan rejection rate rose to 14.2% from 9.1% in February. It also affected several sectors, increasing rejection rates for credit cards (21.5%), credit card limit increase requests (30.7%), mortgages (13.2%), and mortgage refinance applications (20.8%).
The Federal Reserve has increased interest rates 11 times since March 2022. High interest rates are to control inflation. With rates rising, lending has become tighter.
Meanwhile, loan balances increased due to increase in interest rates. The Federal Reserve Bank of New York reported that the credit card balance was exhausted. $1 trillion For the first time, there was an increase of $45 million between the months of April and June.
Due to strict lending limits, some people have stopped applying for loans. According to the report, the application rate for any type of credit in the last twelve months declined to 40.3% from 40.9% in February, its lowest rate since October 2020.