CFPB: Substantial decline in credit applications in March

Federal Issues CFPB Covid-19 Credit Application Consumer Finance Mortgages Auto Finance Credit Cards

On May 1, the CFPB released a report examining the early effects of the Covid-19 pandemic on credit applications in March, concluding there was a substantial decline compared to previous years. Specifically, the report compared “hard inquiry” volume from credit checks for auto loans, mortgages, and credit cards by lenders during the month of March with the same data from previous years. Among other things, the report notes that auto loan inquiries dropped by 52 percent, new mortgage inquiries dropped by 27 percent, and credit card inquiries declined by 40 percent, as compared to usual data patterns from previous years. The report noted variations based on credit score and geography. The drops in inquiries were more pronounced for consumers with higher credit scores, and in states in the Northeast and California. The report noted a strong correlation between states with a higher Covid-19 case rate and the significance of the drop in auto loan and new mortgage inquiries. A similar correlation was also found between states with a larger share of workers entering unemployment and a drop in the same credit inquires.