In the past several years, consumers have become more conservative in how they use credit, but now the number of people who are getting access to more credit is growing.
The percentage of people who saw increases in their existing lines of credit rose substantially from April to October of last year, and is now above the levels seen right around when the recession began, according to new data from FICO Analytics. In all, the percentage of the population with a credit line increase during that time climbed to 26.63 percent, up from just 16.56 percent in the same period two years earlier, as well as the 23.33 percent from April to October 2008. In all, that accounts for more than 2.2 million people who obtained those increases in the most recent period examined.
However, the amount of credit being extended to these people on average and as a whole is also substantially smaller now than it was even immediately following the recession, when lending was at its tightest, the report said. In 2012, the average increase in credit lines came to just $2,397 per person, and the number of people receiving amounts larger than $7,500 was just 6.1 percent. Both of those numbers are down substantially from two and four years prior. In 2010, the average increase was $3,721, and 11.6 percent of people were getting increases of more than $7,500, but in 2008, the size of these extensions averaged $5,545 with 22.5 percent seeing the more substantial increases.
In all, the amount of credit extended to consumers from April to October 2012 was only $5.3 billion, down from more than $10.5 billion four years earlier, the report said. As a result, while some 300,000 more people are getting access to more credit, the amount actually being lent to them is down by nearly half.
Lenders’ reticence to extend the larger lines of credit may be due to the large amount of delinquency and default observed during the downturn. The same is likely true of consumers’ approach to credit, as many may not want to accumulate the outstanding balances they were forced to deal with in the past.