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CFPB Report Shows Recovery in Credit Applications


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The bureau, using data from credit records, finds credit application numbers have returned to pre-pandemic levels.

7/28/2021 8:00

As of May 2021, consumers’ credit applications for auto loans, new mortgages and revolving credit cards had mostly returned to pre-pandemic levels, according to a report from the Consumer Financial Protection Bureau released Tuesday.

“Prime and near-prime consumers are driving this recovery as applications remain down from borrowers with subprime and deep subprime for all types of credit and, for borrowers with super-prime credit scores, applications are down for all types of credit but mortgages,” according to a news release from the CFPB.

The recent report, along with credit application data released in similar reports in May and December 2020, shows an increase in credit applications by borrowers with below prime credit scores in conjunction with the distribution of federal stimulus payments, according to the news release.

“While consumer credit applications have generally recovered to pre-pandemic levels in the aggregate, we see important differences across consumers,” Acting CFPB Director David Uejio said in the news release. “Both borrowers with super-prime and subprime credit scores are still not applying for credit as much as they were pre-pandemic. We will continue to keep a close watch on the marketplace as the economic recovery continues, to help ensure all consumers have access to financial products and services that are fair, transparent and competitive.”

Top findings in the report, according to the CFPB, include:

  • Auto loan inquiries saw a decline of 52% by the end of March 2020 and returned to their usual pre-pandemic trend by January 2021.
  • New mortgage credit inquiries saw a smaller decline in March 2020 compared to other types of inquiries and then increased. Subsequently, inquiries have exceeded their usual, seasonally adjusted volume from 10 to 30%, reflecting the unusually high activity in the mortgage market throughout the pandemic.
  • Revolving credit card inquiries took the longest to recover from the initial March 2020 decline, until March 2021, when the level of these inquiries returned to their usual levels.
  • Consumers with deep subprime credit scores showed the largest decline in auto loan inquiries compared to prior years, followed by inquiries from consumers with subprime credit scores. These consumers also showed declines in new mortgage and revolving credit card inquiries.
  • Changes in auto loan and new mortgage applications were quite varied across the states while changes in credit card applications were generally uniform.

The report also includes state-by-state data on the shift in credit applications for auto loans, new mortgages and revolving credit cards, and shows significant geographic range in the demand for auto loans.

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