Some large banks are starting to ease underwriting standards on U.S. consumer credit card applications, according to survey data the Federal Reserve Board released Jan. 31.
But stricter risk-management policies that went into effect during the recession largely remain in place, the survey found.
“A few lenders might be more optimistic, but most are staying cautious and for good reason,” Adil Moussa, an analyst with Aite Group, tells PaymentsSource. “The economy is still fluctuating, job-creation so far has not met expectations and unemployment rates remain relatively high. So most banks are not changing their lending policies right now.”
In a survey of senior loan officers the Fed conducted in late December and early January, 22.7% of respondents from large banks said during the fourth quarter they “somewhat eased” their standards for approving consumer credit card applications, while 4.3% said they tightened standards and 73.9% said standards remained unchanged.
The Fed surveyed officers at 57 U.S. banks and 22 U.S. branches of foreign banks. Large banks were defined as those with at least $20 billion in assets.
Less than one in five loan officers at large banks extended larger credit limits on consumers’ credit cards during the fourth quarter, with 18.2% reporting they somewhat eased credit limits, while another 18.2% tightened credit limits and 63.6% said credit limits remained unchanged.
Asked whether they lowered the minimum credit score required for consumers to quality for a credit card, 22.7% of loan officers said they lowered limits somewhat during the fourth quarter, while 9.1% increased limits and 68.2% said their credit-score requirements remained the same.
More than half of loan officers polled, 57.1%, said they expected credit card loan quality to continue to improve, while 9.5% expected it to improve “substantially” and 33.3% expected it to stabilize “around current levels,” the Fed said.
Loan officers received the survey Dec. 22, and responses were due Jan. 11.
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