New York Fed: Credit application rates fall, rejection rates rise

Consumer credit demand weakened in 2023 while overall rejection rates for credit applications rose, according to the Federal Reserve Bank of New York’s Credit Access Survey, released today. The average 2023 application rate was 41.2%, which was below its 2022 level of 44.8% and below its pre-pandemic 2019 level of 45.8%. Application rates varied by age, with rates for individuals 40 or older below pre-pandemic levels while rates for individuals younger than 40 were above pre-pandemic levels.

Reported rejection rates among applicants increased by 2.1 percentage points to 20.1% in 2023 from 18% in 2022, according to the survey. The average rejection rate for credit card applications increased by 1.1 percentage points to 19.6%. At the same time, the rejection rate for credit card limit increases declined to 30.9% from 35.3% last year. The average rejection rate for mortgage applications decreased by 2.5 percentage points to 12.1% while the rejection rate for auto loans increased by 5.8 percentage points to 11%. Still, the average share of respondents who were too discouraged to apply for credit declined, falling to 5.2% in 2023 from 6.5% in 2022.