MADISON (WKOW) -- Getting a loan or a credit card used to be effortless; remember all those pre-approved card offers you'd get in the mail? Mortgage approvals with no down payment? Ultimately, so many people got into such deep debt that they couldn't pay their way out. What followed was the mortgage crisis and the near-collapse of the financial industry.
A survey of bank experts by the Professional Risk Managers' International Association shows more people want credit than are getting it and predicts credit will remain tight at least through the end of the year. And the experts say it won't get any easier to get a credit card or loan until the economy begins to grow again and the unemployment rate improves.
According to Kurt Bauer, President and CEO of the Wisconsin Bankers Association, "We are scrutinizing who qualifies for loans, probably more than we did before. We have money to lend. The problem for us, both on the business side and the consumer side, is that we don't have as many borrowers."
At least not as many qualified borrowers. Bauer blames new federal regulations for that.
"Yes, credit has tightened a little bit as a result of the regulatory reaction to the financial crisis. The regulatory agencies have scrutinized the industry more than in the past, and that means banks have to justify their lending decisions when the examiners come in."
And because jobs are crucial to making credit available to more people, banks and credit unions say they're eager to back new businesses. But, when it comes to personal credit, experts say less can lead to more... saving.
"I think that tightening is a good thing. I think that tightening of credit, personally, I think it should have happened a long time ago. It will keep people from getting into trouble in the future because it's tightening it up," says Susan Taylor, a financial educator with the Financial Education Center in Madison.
Some numbers that illustrate the credit crunch: consumer borrowing increased in September for the first time since January and only the second time in more than a year and a half.
And, the personal savings rate went from less than 1% to a current 6% in just the past few years, and credit card debt has dropped steadily for more than a year.
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