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Credit standards for approving card applications tightened at nearly 60% of banks during the first three months of the year, suggest the results of a senior loan officer opinion survey on bank lending practices released yesterday by the Federal Reserve. Nearly 52% of respondents said credit card standards "tightened somewhat," while 41.9% said their standards remained unchanged and 6.5% said they "tightened considerably." The Fed based the findings on survey responses from 53 domestic banks and 23 U.S. branches and agencies of foreign banks. More than 62% of respondents tightened new or existing credit limits during the quarter, while 37.5% said their credit limits remain unchanged. Half of the banks "somewhat" tightened their minimum required credit score for new and existing credit card accounts, and 6.3% "considerably" tightened the required score. A significant majority of banks reported that credit quality for all types of loans is likely to deteriorate over the year if the economy progresses according to consensus forecasts. More than 90% of respondents expect credit card loan quality to deteriorate at least somewhat, and 9.7% expect loan quality to stabilize at current levels.
