FICO, the company behind the credit scores used nationwide, has released a new study finding that the “credit gap” may widen in the near future.
Put simply, the “credit gap” is the relationship between available credit and demand for car loans, mortgages, and cards. According to the survey, while demand for credit is expected to rise over the next few months, tighter lending restrictions means less money will be available for consumers.
The company talked to 235 bank risk professionals, who manage lending at financial institutions across the country. Of those polled, 73 percent said they feel that the number of applications will increase in the next six months. Yet 46 percent indicated they believe lending standards will get tougher, with just 14 percent predicting loosened lending practices.
While the predictions are still negative, the bankers’ views have softened as compared to an earlier survey.
“Although the outlook isn’t as pessimistic as it was earlier this year, it’s clear we still haven’t reached a point of equilibrium between supply and demand for consumer credit,” said Dr. Andrew Jennings, chief research officer at FICO.
Consumers with bad credit may want to apply for their car loans today to find where they stand before lenders become even tighter with their money.