The news: US consumers’ rejection rates for new lines of credit hit a series high of 24.8%, up from 23.1% in June, while application rates remained stable (excluding credit card limit applications, which increased), per the Federal Reserve Bank of New York’s SCE Credit Access Survey.

• The share of discouraged borrowers increased to 8% this October, up from 7.2% in June and 6.6% in October 2024.
• However, the average likelihood of consumers applying for a new credit card, auto loan, mortgage, mortgage refinance, or credit card limit increase all rose in October.

Why this matters: Rejection rates suggest a segment of US consumers are having a harder time accessing credit as fears of a recession brew. 

The signs of economic pressures are accumulating:

• Nearly 30% of consumers with federal student loans were 90+ days delinquent in July, per TransUnion.
• 14.1% of Gen Zers’ credit scores fell 50 points or more in April, per a FICO report.
• And consumer sentiment sank by 6.2% month-over-month (MoM) and 29.9% YoY, per the University of Michigan’s Survey of Consumers, driven in part by anxieties from the longest-ever US government shutdown.

For average or distressed consumers, accessing credit to navigate these conditions has become harder, especially as issuers chase after the wealthiest 10% of households, whose purchases account for half of consumer spending, per Moody’s estimates—up from just one-third in the early 1990s.

Our take: As issuers tighten the purse strings for working-class consumers, buy now, pay later (BNPL) providers have an opportunity to steal market share. 

Integrating their buy buttons at point-of-sale (POS) and marketing their BNPL debt cards can help reach these consumers where they shop. Competitive promotions during Q4, like Affirm’s 0% interest holiday, can also help pique consumers’ interest and earn their trust during the holiday shopping season.