Banking activity among noncitizens and borrowers without established credit histories has declined sharply as the Trump administration intensifies immigration enforcement and federal scrutiny of financial institutions.
By yourNEWS Media Newsroom.
The Trump administration’s immigration crackdown is beginning to reshape how some illegal immigrants interact with the U.S. financial system, with fewer borrowers seeking credit and some immigrants withdrawing money from banks altogether amid heightened concerns over immigration status and federal enforcement.
Illegal Immigrants have been closing accounts and returning to storing cash at home, according to a Bloomberg report published through Yahoo Finance. Lending activity among the population has also declined as financial institutions reassess the risks associated with customers whose ability to remain and work legally in the United States may be uncertain.
Consumer lending to illegal immigrants has fallen sharply since 2024, according to the report, while lenders have become more reluctant to originate loans involving borrowers with limited or nonexistent credit histories.
“We’ve seen a reduction overall in people who come for financial services, education services, workforce development,” said Erica Serna, associate director of financial empowerment for UnidosUS.
Serna described the current environment as “truly frightening for families.”
The changes come as President Donald Trump’s administration expands deportations, cancels work permits and increases scrutiny of residency and employment status across the country.
More than 1 million people have been deported since Trump returned to Washington, according to the information provided, while work authorizations have been canceled nationwide.
Trump also signed an executive order in May directing federal authorities to ensure that financial institutions pay closer attention to the residency status of current and prospective customers.
The policy shift represents a departure from the approach taken during the Biden administration.
In 2023, the Biden administration warned financial institutions that denying credit solely because of a person’s actual or perceived immigration status could violate federal law.
“Denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law,” the administration said at the time.
The changing federal posture has generated uncertainty for banks as they determine how to evaluate customers whose immigration or employment authorization could change during the life of a loan.
The Independent Community Bankers of America has objected to elements of the administration’s new requirements, warning against rules that could impose additional compliance costs on smaller institutions.
The group urged policymakers to “avoid information collection requirements that impose substantial burdens on community banks, undermine their ability to meet the needs of local communities, and drive American citizens out of the regulated banking system.”
Federal regulators, however, have increased pressure on financial institutions to verify the legal sources of customer funds.
The Treasury Department’s Financial Crimes Enforcement Network has advised financial institutions to ensure that customers are depositing funds earned legally and through authorized employment.
Against that backdrop, lending to borrowers without traditional credit histories has fallen dramatically.
“Across all asset classes, the share of loans to people without credit scores fell more than 70% from 2024 to 2025 and another 40% in 2026,” Bloomberg reported.
Auto loans and credit-card lending to borrowers with weak or nonexistent credit histories are expected to total approximately $7.2 billion in 2026, down from roughly $37 billion in 2024.
Those figures do not precisely measure lending to undocumented immigrants because borrowers without conventional credit scores include other groups as well. Bloomberg reported, however, that the category contains the largest concentration of undocumented borrowers and can therefore serve as an indicator of changing lending patterns affecting that population.
“It is the segment with the largest concentration of undocumented borrowers,” said Vadim Verkhoglyad, head of research at dv01, who authored the report cited by Bloomberg. “The timing suggests lenders may be reducing exposure to these borrowers amid changes to the political and policy environment.”
A separate social media post also highlighted the broader decline in financial activity among undocumented migrants.
The retreat from conventional banking is not limited to borrowing.
Immigration attorney Jennifer Oltarsh said fear of enforcement has prompted some of her clients to remove savings from financial institutions and hold the money themselves.
“My clients are afraid, so they’re pulling their money out of banks,” she said. “They’re holding it in their mattresses.”
The combination of stepped-up immigration enforcement, work-permit cancellations, new compliance expectations and lender caution is creating a markedly different financial environment from the one that existed during the Biden administration.
While the available lending statistics are an imperfect proxy for undocumented borrowers, the sharp decline among people without established credit histories, together with reports of illegal migrants withdrawing deposits and avoiding financial institutions, points to a broader contraction in their participation in the U.S. banking system.
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