NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey, which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is fielded every four months, the latest of which was fielded in October 2019. A press release summarizing trends from the past year is issued annually.
The latest Survey shows that households’ credit experiences and expectations remained fairly stable in 2019 compared to 2018. Among the most notable changes in 2019 were a slight increase in application rates combined with a decrease in rejection rates. This pattern was driven in part by households’ experiences with mortgage loans. Looking ahead, households also generally expect to be more likely to apply for and receive credit over the coming year.
More specific findings from the Survey over the past year include:
Experiences
- The share of respondents who were too discouraged to apply for credit over the past 12 months despite needing it, was 6.4% on average in 2019, just slightly above the 2018 average of 6.3%. The proportion of respondents who applied and were granted credit over the last 12 months increased 1.2 percentage points to 37.7% on average in 2019. The proportion of respondents who applied for credit and were rejected, declined from a 9.1% on average in 2018 to 8.0% in 2019. Since June 2019, this reading has held steady at 8.3%.
- Reported application rates for any kind of credit were slightly higher in 2019, at 45.8% on average, than in 2018, at 45.5% on average. The increase was driven by respondents with credit scores below 680, and respondents between the ages of 40 and 60.
- Reported rejection rates among applicants have decreased from an overall average of 19.9% in 2018 to 17.6% in 2019. The decrease is driven by respondents who are older than 60, and those with a credit score higher than 760.
- Turning to applications and rejections experienced by respondents in the 12 months preceding each survey for specific credit types (credit cards, credit card limit increases, auto loans, mortgages, and mortgage refinancing):
- Application Rates
- The application rate for credit cards remained stable on average in 2019 compared to last year, at 27.5%.
- Application rates for auto loans declined 2.9 percentage points to 12.6% on average in 2019, from 2018. The decrease was driven by respondents with credit scores lower than 680.
- Application rates for mortgage refinancing also declined slightly from 8.3% on average in 2018 to 8.0% in 2019.
- In contrast to application rates for mortgage refinancing, mortgage loan application rates rose steadily over the past 12 months from 6.7% in October 2018 to 8.4% in October 2019. Overall, mortgage loan application rates increased from an average of 7.1% in 2018 to 7.9% in 2019. The increase was driven by respondents with a credit score higher than 680.
- Application rates for credit card limit increases rose 0.6 percentage point in 2019 to an average of 12.7%.
- Rejection Rates
- Reported rejection rates for credit cards, mortgages, and mortgage refinance applications all declined compared to 2018.
- The rejection rate for auto loans increased steadily over the past 12 months, from 4.5% in October 2018 to 8.1% in October 2019. Overall, the reported rejection rate for auto loans increased from 6.1% on average in 2018 to 7.1% in 2019.
- The reported rejection rate for credit card limit increases remained steady in 2019, increasing only 0.1 percentage point to 30.8% from last year’s average.
- Voluntary and involuntary (lender-initiated) account closures for any type of credit were virtually unchanged in 2019 compared to last year averages at 15.4% and 6.3%, respectively.
Expectations
- The Survey provides mixed evidence on the subjective financial fragility of U.S. households. While the average probability of needing $2,000 for an unexpected expense in the next month increased from an average of 32.9% in 2018 to 33.6% in 2019, the average probability of being able to come up with $2,000 if an unexpected need arose within the next month increased from 68.6% on average in 2018 to 69.8% in 2019.
- The proportion of respondents who report they are likely to apply for at least one type of credit over the next 12 months increased from 25.6% in 2018 to 26.8% in 2019. In fact, the average likelihood of applying for each specific kind of credit over the next 12 months increased this year compared to last.
- The average perceived likelihood of a credit application being rejected, conditional on applying over the next 12 months, declined in 2019 compared to 2018 for credit cards, credit card limit increases, and mortgage refinancing. Meanwhile, the average perceived likelihood of a credit application being rejected for mortgages and auto loans rose by 1.0 and 0.6 percentage points to 34.6% and 23.9%, respectively.
Detailed results are available here.
About the SCE Credit Access Survey
The SCE Credit Access Survey, fielded as part of the SCE, provides information on consumers’ experiences and expectations regarding credit demand and credit access. Every four months, SCE panelists are asked whether they applied for credit in the past 12 months and the resulting outcomes. They are also asked about their expectations of applying for credit over the next 12 months and the perceived likelihood of those applications being accepted. This information is collected for five specific credit products: auto loans, credit cards, credit card limit increases, mortgages, and mortgage refinancing. Survey findings (in instances with sufficient sample sizes) are also presented separately by age and self-reported credit score subgroups. A press release summarizing trends from the past year is issued annually.
More information about the SCE survey goals, design, and content can be found here.
