CFPB Reports Declines in Credit Inquiries During Coronavirus Pandemic

Credit applications—as measured by the number of credit inquiries—fell significantly in March during the early days of the coronavirus pandemic in the U.S., according to a new report issued by the Consumer Financial Protection Bureau today. The survey was compiled using data from the CFPB’s Consumer Credit Panel—a nationally representative sample of de-identified credit records from one of the three credit reporting agencies.

The CFPB observed a 52% drop in auto loan inquiries between the first and last week of March, a 27% decline in new mortgage inquiries, and a 40% drop in new revolving credit card inquiries. These declines were “significantly more pronounced for consumers with higher credit scores,” the report noted. The CFPB also noted substantial geographic variations in the declines in credit inquiries, with the several Northeastern states, California, Michigan and Nevada experiencing the most significant drops.

“The observed drop in inquiries could be due to a drop in underlying credit demand, a drop in credit supply affecting inquiries either directly or indirectly by heightening consumers’ expectation of being turned down for credit, or a lack of opportunity for car and home sales to take place due to physical restrictions on movement and economic activity,” the CFPB noted. “Regardless of the reason, the data indicate all types of inquiries dropped significantly and that consumers with higher credit scores have more flexibility in substituting away from applying for credit than consumers with lower credit scores.”