I have to admit I’ve yet to see any reduction in credit card limits or credit card offers. But new data from the Federal Reserve shows that banks are indeed tightening their lending standards.

Here’s a summary courtesy of Bill Hardekopf at www.lowcards.com.

The Federal Reserve October 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices found:

* About 50% of domestic banks reported that they increased the minimum required credit scores on credit card accounts over the past three months. 60% reported that they raised minimum scores on other consumer loans over the same period (this is about the same as the July survey).

* A majority of respondents, about 60%, reported that they reduced the extent to which credit card accounts were granted to customers who did not meet their bank’s credit-scoring thresholds. A similar percentage of respondents reported a reduction in granting other kinds of consumer loans for that reason.

* About 20% of domestic banks reported having reduced credit limits on existing credit card accounts to prime borrowers.
But roughly 60% of banks had lowered limits on existing credit card accounts of nonprime borrowers; no banks reported raising limits to those borrowers. Reasons for lowering credit limits include: an uncertain economic outlook, a more conservative position on risk, a decline in customer credit scores, and missed payments by customers on credit card loans and other loans at their bank.

* Almost 60% of respondents indicated that they had stiffened lending standards on consumer loans over the past three months.

Share your stories of reduced credit limits or trouble getting money here.

This entry was posted on Wednesday, November 12th, 2008 at 3:07 pm and is filed under credit. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.