Large U.S. lenders and financial technology companies are setting stricter rules for approving new loans to consumers and small businesses as rising unemployment and a potential recession stoke concerns that defaults will jump, The Wall Street Journal reported.
JPMorgan Chase & Co., Bank of America Corp., Capital One Financial Corp. and Santander Consumer USA Holdings Inc. are some of the lenders looking over their lending criteria amid a coronavirus pandemic that is forcing many people to stay at home, the newspaper said, citing people familiar with the matter.
Measures under consideration include accepting fewer consumers with credit scores below a certain threshold, implementing lower spending limits on new credit cards and requiring additional income documentation.
Meanwhile, American Express Co. has cut down on financing offers to small businesses, people familiar with the matter told WSJ. Fintech lenders Square Inc. and On Deck Capital Inc. are expected to make similar moves, with On Deck saying in a regulatory filing that it will look to "significantly tighten underwriting standards," among other measures.
Earlier in March, LendingClub Corp. decided to tighten its credit standards and cut back on loan approvals. LendingClub is reducing its approval rate for "certain higher-risk" borrowers and raising its income and employment verification requirements.
Synchrony Financial is making changes to underwriting standards for new card applicants, people familiar with the matter said.
Market research company Competiscan found that fewer email solicitations for credit cards and personal loans are being sent. AmEx, Bank of America and JPMorgan have sent next to no card solicitations in over a week, according to the report.