Consumer credit demand sharply rebounded in 2021, with most credit application rates rising and returning to 2019 levels, according to the Federal Reserve Bank of New York’s latest Credit Access Survey released today. The survey gauges consumers’ experiences and expectations regarding credit over the previous year.
The results show that rejection rates overall increased by two percentage points from 15.7% in 2020 to 17.5% in 2021, just below the 2019 level of 17.6%. The rise reflects an increase in applications by those with lower credit scores, according to the Fed report. Over the past 12 months, the Fed found that rejection rates for credit card and mortgage loan applications rose while auto loan and credit limit increase applications declined slightly.
Application rates, meanwhile, rebounded to a pre-pandemic level of 45.6% over the course of 2021, after dropping by 11 percentage points to a series low of 34.6% in October 2020. The share of applicants who were too discouraged to apply for credit in the past 12 months, despite needing it, was 6.6%, down slightly from last year when the average was 7%.
Meanwhile, the share of respondents who said they are likely to apply for credit in the next 12 months rose from 26.1% in 2020 to 29.9% in 2021.