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Fed Survey shows that Banks have Tightened Standards on Credit Lending

According to a recent survey, uncertainty about the economic outlook was a major factor in the pull back of lending.

Banks are now worried about the borrowers' ability to repay credit cards and other loans. They have increased their underwriting standards for credit card applications in 2019. During the first quarter of 2019 standards have tightened the most since 2009, according to a report from Moody's Investors Service.

Banks have not only tightened credit standards, but are also less likely to approve credit card and auto loans for borrowers with a score of 620 or less.There was also less tolerance for risk and concerns regarding the ability of new loan applicants to repay the debt they owe.

Residential loans for real estate have remained the same and have not change according to the Fed Survey. As far as business lending, banks did tighten standards on commercial real estate loans. Commercial loans and industrial loan requirements remained the same.

The Fed Survey consisted of 76 domestic banks and 22 branches and agencies for foreign banks. This survey was conducted in September of this year 2019.

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