1 in 5 Americans Turned Down for Credit in 2020
When it comes to applying for new credit cards, about 1 in 5 Americans say their application was refused in 2020. Millennials fared slightly better at 19%, while almost 21% of the rest of the applicants received a negative response.
The information comes from a new online survey from YouGov fielded on behalf of Bankrate in October among 3,780 U.S. adults. Lending standards have tightened in 2020 due to the pandemic and related economic uncertainty, says Bankrate.com industry analyst Ted Rossman.
About a third of millennials (ages 24-39) say they’ve been rejected when applying for credit cards, mortgages, car loans and other financial products this year because of their credit score. And while 32% sounds like a big number, the rate of rejection among millennials is actually half of what it was when Bankrate asked about credit denials last year and found that six in 10 were rejected when applying for financial products.
Those with lower incomes were more likely to face a rejection. About a third, 31%, of those rejected reporting having an income of less than $40,000. Meanwhile, only about 14% of those making over $80,000 reported being denied credit. Creditors were especially likely to issue rejections in March, April and May, when there was a high level of uncertainty about how the pandemic would affect debt repayment. Another effect of this has been the disappearance of 0 percent APR balance transfer credit card offers.
Millennials had an average credit score of 658, up 11 points from last year’s average score of 647. Overall, millennials have an average outstanding balance of $1,871 on their credit cards and have a 30% credit utilization rate, according to Experian.