Banks Tighten Lending Standards For Credit Cards

(KNSI) – Inflation continues to take a bite out of people’s wallets.

The Federal Reserve conducts a monthly survey of senior loan officers from banks across the country. The central bank says consumers are clamoring for new credit cards and home equity lines of credit in a bid to afford basic necessities. By contrast, survey respondents in October say that there is little to no demand for auto and home loans. Mortgage rates have soared to over seven-point-three percent in recent weeks.

The October Senior Loan Officer Opinion Survey shows banks are becoming concerned about the ability of borrowers to pay the money back. The officers say they are tightening lending standards for both types of loans. Applicants with FICO scores of under 680 are less likely now to be approved than if they had submitted their request at the beginning of the year. Borrowers with a good or excellent credit score (720-plus) are more likely to have their application accepted.

In a separate report, the Federal Reserve says consumer credit in September grew by $25 billion from the month prior. That was significantly below expectations of $30 billion. Credit cards and other revolving debt (+12.9%) are growing nearly three times as fast as auto and student loans (+4.9%).

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