Press Release

Consumers Experience and Expect Fewer Credit Application Rejections; Share of "Discouraged" Credit Applicants Declines

November 20, 2017
Given data processing issues, certain data in the following release were edited in August 2018

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its October 2017 Survey of Consumer Expectations (SCE) Credit Access Survey, which is fielded every four months. Consumers’ recent experiences were positive, with declines in both rejection rates for credit applications over the past 12 months and in the share of “discouraged” credit applicants. The share of “discouraged” credit applicants reached a new series’ low.

Regarding consumers’ expectations about the future, the proportion of respondents who reported they are likely to apply for credit over the next 12 months was essentially unchanged. Compared to the past few years, consumers showed greater optimism about the likelihood of future credit applications being accepted. Consumers’ financial fragility improved, continuing a slow overall upward trend seen since June 2016.


  • The share of respondents who were too discouraged to apply for credit over the past 12 months despite needing it, decreased again to 5.7% in October, after declining from 8.2% in February and 5.9% in June. The October reading is the lowest since the start of the Credit Access Survey in October 2013. The proportion of respondents who applied and were granted credit over the last 12 months increased from 39.9% in June to 41.3%, while the proportion of respondents who applied for credit and were rejected dropped from 10.7% in June to 7.7%.
  • Application rates declined slightly from 50.6% in June to 49.0%, approaching its trailing two-year average of 48.7%.
  • Rejection rates declined. Both the per applicant rejection rate and the per application rejection rate decreased from their June readings of 21.2% and 16.5%, to 15.7% and 13.6%, respectively, with both rates approaching series’ lows. The decreases in both rates were driven primarily by respondents under age 60.
  • Turning to specific credit types (credit card, credit card limit increase, auto loan, mortgage and mortgage refinance):
    • Application rates decreased for all loan types, except mortgage loans. The application rate for credit cards decreased from 29.5% in June to 28.2%. Similarly, application rates for auto loans, credit card limit increases and mortgage refinancing fell from 16.6%, 12.2% and 10.5% in June to 15.8%, 12.0% and 8.0%, respectively. Mortgage loan application rates increased from 7.7% in June to 9.2%. The increase was driven by middle-age (over 40 and under 60) and middle credit score (over 680 and under 760) respondents.
    • Rejection rates declined for all credit types.
  • Voluntary and involuntary (lender-initiated) account closures declined to 14.9% and 5.7%, respectively.
  • Expectations

    • The proportion of respondents who report they are likely to apply for at least one type of credit over the next 12 months was essentially flat at 25.6% in October, remaining close to its series’ low of 25.5%. The average likelihood of applying for specific kinds of credit over the next 12 months was largely stable for all credit types, with the largest change being an increase in the average likelihood of applying to refinance a mortgage from 7.5% in June to 8.6%.
    • The average perceived likelihood of a credit application being rejected, conditional on applying over the next 12 months, declined for all credit types. The average perceived likelihood of a rejection for credit card, a credit card limit increase, mortgage and auto loans all are well below their readings for the past few years.
    • Subjective financial fragility of U.S. households improved. While the average probability of needing $2,000 for an unexpected expense in the next month increased from 32.2% in June to 33.0% in October, the average probability of being able to come up with $2,000 if an unexpected need arose within the next month increased from 67.1% in June to 69.5%, its highest value since at least October 2015.

    Detailed results are available here.

    About the SCE Credit Access Survey

    The SCE Credit Access Survey, fielded as part of the SCE (Survey of Consumer Expectations), 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. We collect this information 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.

    More information about the SCE survey goals, design, and content can be found here.

Betsy Bourassa
(212) 720-6885
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