Credit approval likelihood jumps ahead of pre-pandemic levels

The likelihood of consumers securing credit has overtaken pre-pandemic levels, according to latest analysis by Experian.

The number of people who have a strong chance of being approved for a credit card is currently 5% higher than in March 2020, while people’s chances of being approved for a loan is 6% higher.

Consumers now have a far wider choice of financial products, as lenders bring more offers to the market. This is demonstrated by a 15% increase in the number of credit cards available on Experian’s price comparison service from January 2021 to May 2021. These offers include an increased number of 0% interest balance transfer cards for periods of up to 29 months, with four of these available compared to just one in January 2021.

Further, enquiries for credit cards and loans have surged since lockdown restrictions began to ease on 12 April. Searches for credit cards rose 28% in the three weeks since outdoor pubs, shops and hairdressers reopened, while searches for loans increased 26%.

The analysis also found that applications for loans have increased most among older age groups since the lockdown relaxations started. Data shows a 20% increase in loan applications from those in their 50s, and a 42% increase for those 60+.⁴ A potential driver for this growth is higher spending on home improvement.

Seb Worbs, Managing Director for Products at Experian Consumer Services, said “Our analysis demonstrates increased confidence from both lenders and consumers. Consumer eligibility for credit cards and loans is moving ahead of pre-pandemic levels, and it’s interesting to see the increase in older age groups applying for loans. They might be using credit to invest in home renovation projects, or perhaps spend more on their family post-lockdown.”