As interest rates stay elevated and inflation remains stubbornly high, many Americans appear to be finding it tougher to access the financing they need — and it’s posing challenges for both their finances and their aspirations.
Nearly half of Americans (45 percent) said they have applied for a loan or financial product in the past 12 months since December 2023, according to Bankrate’s annual Credit Denials Survey. Yet, 48 percent of those applicants faced a rejection on at least one application.
What’s more, it’s likely that those rejection rates are on the rise. The latest data from the Federal Reserve Bank of New York suggests that it’s getting tougher — not easier — for Americans to get approved for new loans or credit. Lenders reported higher rejection rates on all credit applications in 2024 than in 2023, according to the regional reserve bank’s latest Credit Access Survey. They hit record highs on auto loans and mortgage refinance applications, and across the board, loan rejections remain above levels seen in 2019.
Experts interviewed by Bankrate say the issue stems from a complex web of economic challenges, starting first with the post-pandemic inflation surge that squeezed households’ budgets and continuing as financing costs rapidly rose. Coinciding with rising rejection rates, New York Fed data also shows that the most Americans in over a decade are falling behind on their bills — a concern to lenders, whose utmost priority is getting paid back.
Yet, inflation hasn’t hit all households equally, with upper-income, affluent Americans better positioned to weather the surge in prices. Those same Americans are more likely to get approved for loans, while lower-income households are finding it tougher to access credit, Bankrate’s survey finds.
Lower-income households are more likely to use credit cards as a financing tool. They’re more likely to carry balances and to use credit as a way to purchase gas, groceries and other essentials. They pay interest rates which far outweigh the value of the rewards, and credit card debt can be a tough cycle to break.
— Ted Rossman, Bankrate senior industry analyst
Key findings from Bankrate’s 2025 Credit Denials Survey
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These are the loans or products that have been toughest for Americans to access
The Americans who’ve been denied a loan could be getting caught in the crosshairs of tighter monetary policy. Slowing the flow of credit to households is just one way that the Federal Reserve combats inflation. Credit doesn’t dry up altogether, but lenders grow pickier about who they approve — especially as Americans suddenly need more income to qualify for loans with higher payments.
Yet, credit has tightened even after the Fed’s full percentage point worth of rate cuts in 2024. That might be because borrowing costs across all loan and financial products tracked by Bankrate are still at a decade-plus high — and are expected to stay that way in 2025, according to Bankrate’s 2025 Interest Rate Forecast.
About 1 in 8 total applicants were rejected for credit cards (13 percent). Other frequent rejections include:
- a credit limit increase on a credit card: 11 percent;
- personal loans: 11 percent;
- insuranceK 7 percent
- car loan/lease: 7 percent;
- balance transfer cards: 6 percent;
- mortgages: 5 percent;
- debt consolidation loans: 4 percent;
- home equity loan/home equity line of credit: 4 percent; and
- home/apartment rental applications: 4 percent.
Nearly half of Americans who applied for a credit limit increase on a credit card (48 percent) were denied, the highest rejection rate of any loan or financial product that Bankrate looked at. On the other hand, insurance applications had the lowest rejection rate among applicants, at 25 percent, Bankrate’s survey also found.
About 14% of applicants have been denied more than one loan or financial product. Another 6 percent selected “Don’t know/can’t recall,” while 5 percent chose “Prefer not to say.”
Meanwhile, 2 in 5 applicants (40 percent) said all their loan applications have been approved.
Why are rejections rising? In part because lenders aren’t sure if they can rely on traditional credit scoring models, Synchrony’s chief credit officer says
“This is one of the hardest times to make an underwriting for our decision since at least the Great Recession. Credit scores have changed dramatically since the beginning of the pandemic. Monetary and fiscal policy coming together; $2 trillion in stimulus. At the bottom decile of people who lost their jobs, there was a 400 percent income replacement, which means they were making four times the amount of money not working than when they were working. What that did is allow the consumer to deleverage, which significantly increased their credit scores temporarily — and probably artificially inflated the credit worthiness of a consumer. The industry over extended credit in aggregate and has seen higher delinquency and higher loss.”
— Max Axler, executive vice president and chief credit officer at Synchrony
Parents, low-income Americans and younger generations are most likely to be denied
While Americans with lower credit scores tended to have the toughest time accessing credit, respondents with above-average credit scores weren’t shielded from rejection, Bankrate’s survey found.
Almost half (45 percent) of applicants with scores between 670-799 — those considered to have “good” or “very good” credit — were denied. Applicants with credit scores under 670 (at 64 percent) were more than twice as likely as those with exceptional credit to face a rejection (at 29 percent for applicants with scores between 800-850).
Rejection rates also skewed younger, likely given borrowers’ limited borrowing and credit history. Bankrate found that Gen Zers (at 18 percent) are the most likely to not have a credit score, while baby boomers and Gen Xers (at 36 percent and 22 percent, respectively) are the most likely to have exceptional credit, compared with 10 percent of millennials and 8 percent of Gen Zers.
| Applicants by generation | All my applications approved | Denied something |
|---|---|---|
| Generation Z (ages 18-28) | 17 percent | 65 percent |
| Millennials (ages 29-44) | 31 percent | 59 percent |
| Gen X (ages 45-60) | 44 percent | 41 percent |
| Baby boomers (ages 61-79) | 64 percent | 30 percent |
Lower-income applicants (those making under $40,000 a year) were also more likely to be denied (at 59 percent), compared with 43 percent for both those making between $40,000 and $79,999 and 43 percent of those making $80,000 or more. Applicants earning under $40,000 a year were also the least likely to have exceptional credit (at 10 percent), versus 22 percent of those making between $40,000 and $79,999 and 32 percent of those making $80,000 and up.
Income is not a factor in one’s credit score calculation, and making less money does not directly correlate with a low credit score. Yet, when deciding whether to approve a prospective borrower, lenders look at an applicant’s debt-to-income ratio — and maintaining a healthy balance has been even harder for low-income Americans who’ve been hit hardest by inflation.
Bankrate data shows that lower-income Americans have been more likely to carry a balance on their credit card. Some have even maxed out a credit card since the Fed started raising interest rates.
Applicants with children younger than 18 at home also faced a greater degree of rejections (at 55 percent), compared with just 32 percent of parents with children 18 and older. The post-pandemic surge in inflation has challenged parents in particular, impacting expenses like child care and grocery costs.
Americans’ access to credit reflects a widening between the ‘haves’ and the ‘have nots,’ Bankrate’s Rossman says
“Credit is still flowing freely for prime customers, but they’re not in the market for as many loans. That’s often the case, but it’s been especially true the past couple years as income inequality has grown. High prices and high interest rates — that’s made it a lot more difficult for people to pay off credit card debt. Upper-income households are using it more as a convenience or rewards tool, but a lot of lower-income households are using credit cards to get by. It’s not usually a vacation or a shopping spree. It’s usually an emergency expense or just day-to-day living outpacing your paycheck.”
— Ted Rossman, Bankrate senior industry analyst
The majority of denied applicants said the rejection hurt their personal finances
Economists have quipped throughout history that the “American Dream” wouldn’t exist if not for the installment loan. Rarely do consumers have enough cash on hand to purchase the homes, cars, appliances and more that they aspire to own. Credit was believed to equalize opportunities, giving all Americans, not just the affluent, a chance to ascend — provided they paid it all back.
Rising rejections, though, could impede those aspirations. The majority (65 percent) of them said it negatively impacted their personal finances in at least one way, Bankrate’s survey found. That includes:
- feeling more stressed about the state of their finances: 22 percent;
- having to borrow from family or friends: 20 percent;
- not being able to access the credit they need: 17 percent;
- having to pursue alternative financing, such as payday loans, cash advances and buy-now, pay-later products: 14 percent; and
- delaying a major financial milestone: 13 percent.
Still, facing a credit denial appeared to have been a wake-up call for some applicants. More than half of rejected applicants (54 percent) took at least one action that could boost their odds at getting approved in the future, such as:
- working on improving their credit score: 23 percent;
- paying off or making a plan to pay off existing debt: 16 percent;
- increasing or making a plan to increase their income: 15 percent;
- seeking out financial help to improve their credit score or help with reapplication: 14 percent; and
- requesting an explanation from their lender as to why their application was denied: 10 percent.
Even so, few rejected applicants (13 percent) said being denied a loan or financial product didn’t negatively impact their finances. That includes 2 percent who said it positively impacted their finances.
Financially vulnerable Americans might take steps that harm their wallets — and this economist is worried about it
“When we feel vulnerable, it distorts our time preference. We are coded to respond to stress by focusing intensely on the ‘me, here and now’ because the future doesn’t matter. Those at the top don’t suffer from that. They will invest for the future, they will plan, they will think strategically. We as a nation have prided ourselves on the ability of those at the bottom to rise up, that there was a clear economic ladder. I worry that not only have the rungs been removed from the ladder, but that the ladder itself is now missing.”
— Peter Atwater, president of Financial Insyghts and an adjunct economic professor at the College of William & Mary who studies consumer confidence
Making a big-ticket purchase? Here are 4 tips for boosting your approval odds
If a lender rejects your application, the’re obligated under both the Equal Credit Opportunity Act (ECOA) and Fair Credit Reporting Act (FCRA) to inform you of the specific factors that impacted your application — or to at least tell you that you can request more details within 60 days, according to the Consumer Financial Protection Bureau (CFPB).
“It might take a little digging,” Rossman says. “But people should get to the root of what’s going on.”
If you’ve recently been denied a loan or are trying to improve your chances at accessing future borrowing, take these three steps to boost your approval odds:
- Pay your debts on time and keep your credit utilization low: Various factors influence your credit score, but your payment history and credit utilization carry the most weight. Maintain no more than 30 percent of your available credit and prioritize making all of your payments on time. Repairing your credit won’t happen overnight, but even small steps can compound to make a difference over time. Consumers might even be able to use tools like Experian Boost to get credit for on-time payments that aren’t typically reported to the credit bureaus.
- Monitor your credit report for errors: Occasionally, something could be dinging your credit score through no fault of your own, such as an error on your report. Americans can request copies of their credit report from the three major credit bureaus for free. Experts typically advise checking them for any errors once a year. If you notice anything inaccurate, you’ll need to file a dispute immediately with the credit bureau reporting the error. If it shows up across all of the major credit bureaus, you might need to contact each agency individually.
- Boost your income and pay down debt: Lenders typically want to see prospective borrowers spend no more than 36 percent of their monthly income on their recurring debt obligations, such as their rent, mortgage payments, credit card balances and more. If you currently spend more than that, you might need to craft a plan to pay off debt or pad up your income. That might include asking for a raise, learning a new skill that can bolster your employability or transferring any outstanding credit card debt to a balance-transfer card. In other words, reevaluate how much money is leaving your wallet — and how much money is coming in.
- Manage your finances holistically: To hedge against credit scores being less reliable, Synchrony uses a proprietary underwriting system — nicknamed “PRISM” — that assesses up to 9,000 data points on a consumer’s financial and credit habits, Axler says. Some make their way to the typical credit-scoring system, like credit mix and total monthly spending. They can also, however, find out if a customer has been delinquent before it’s been reported to the credit bureaus. The model has helped the firm manage the ebbs and flow of the economic landscape while also approving more people who might traditionally be declined, Axler says. Axler’s best advice for getting approved in a shifting landscape? Pay consistently (set up autopay for good measure), pay more than the minimum payment and grow your credit history.
“The majority of the data we’re looking at now is not your credit score,” Axler says. “For issuers not supplementing that data, they have raised their cut offs because the probability of default has changed.”
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