Lenders Begin Tightening Credit Standards

Lenders of all stripes are starting to review their lending criteria as they anticipate seeing a wave of applications from borrowers in need of capital; reporting from the WSJ indicates lenders are tightening standards including approving fewer applications for lower credit scores, more income verification documents and lower lines of credit on credit cards; Fundera CEO Jared Hecht explains to the WSJ “Lenders have zero idea how to assess risk in this environment,” Mr. Hecht said. “There is no model that can predict today if I lend $1, will I get paid back?”; unemployment is expected to rise significantly in the short term and there is no guarantee when the economy will start coming back; email and direct mail solicitations have also slowed significantly in the last week as lenders continue to become more worried; just as consumers need help the most lenders will begin slowing the extension of credit at least until they see some good signs, which could be at the very least months away. The Wall Street Journal

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