1 in 5 Applicants Rejected for Credit; Americans Raiding 401(k)s to Cover Basic Living Costs

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As economic uncertainties deepen, the latest findings from the Federal Reserve Bank of New York’s Credit Access Survey paint a concerning picture for consumers. The survey reveals a notable decline in credit demand, with weakening application rates and rising rejection rates, notably in auto loans. Looking forward, households express a decreased likelihood of applying for new credit cards, auto loans, or mortgages, anticipating higher rejection rates. Concurrently, a record share of auto loan applicants report rejections, highlighting the tightening credit environment. Disturbingly, Americans grappling with inflation and financial strain are resorting to raiding their 401(k)s, as evidenced by a surge in hardship withdrawals for basic living costs. The collective data points to a growing financial fragility among U.S. households, underscoring the challenging economic landscape and its impact on consumer credit access.

Consumers Expect Further Decline in Credit Applications and Rise in Rejection Rates

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey, which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is fielded every four months, most recently in October 2023, and a press release summarizing trends from the past year is issued annually.

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A record share of people applying for car loans got rejected this year, New York Fed survey finds

Would-be car buyers say lenders have been tapping the brakes hard in 2023, according to a new look at consumer access to credit.

A record-breaking share of auto loan applicants say they’ve been rejected for loans this year, according to the Federal Reserve Bank of New York.

Based on surveys collected in February, June and October, an average…

Inflation-Battered Americans Raiding 401k’s To Pay Mortgages And Rent

In the latest sign of an economy edging deeper into troubled waters, more Americans are raiding their 401(k) retirement accounts to cover basic living costs, according to data released by Fidelity Investments on Monday.

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“Americans outside the wealthiest quintile have run out of extra savings generated early in the pandemic and now have less cash on hand than they did when the pandemic began,” notes Bloomberg‘s Alexandre Tanzi, citing Fed data.

According to Fidelity, 2.3% took a hardship withdrawal in the third quarter, up significantly from the 1.8% rate observed in the same quarter of 2022. The top two reasons given for the third-quarter hardship withdrawals: avoiding foreclosure/eviction, and medical expenses. 

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