Credit in Uncertain Times: Why Conditions Matter More Than Ever

The fundamentals of credit assessment don’t change, but the world around us does. Economic shifts, geopolitical tensions, and policy decisions all influence lending risk, making Conditions a critical factor in any credit decision.

Right now, we’re seeing just how important external factors can be. Inflation remains a concern, interest rates are still in flux, and global trade uncertainty is resurfacing. The U.S. has signaled potential tariffs on Canadian goods, creating new risks for businesses that rely on cross-border trade. For lenders, these macroeconomic conditions aren’t just background noise—they directly impact a borrower’s ability to repay.

I’ve seen firsthand how shifting conditions can turn a strong credit into a struggling one. A business that looked rock solid a year ago might now be facing higher costs, reduced demand, or supply chain disruptions. That’s why stress-testing financials and considering broader industry risks is just as important as analyzing a balance sheet.

The effects aren’t limited to businesses—consumers are feeling the pressure too. Higher costs of goods, rising mortgage payments, and economic uncertainty are leading to increased debt burdens. Delinquencies are starting to rise in certain segments, and household savings, which provided a cushion during the pandemic, are dwindling. As lenders, understanding these shifts is crucial—not just to assess risk, but to ensure we’re offering responsible credit that helps rather than harms borrowers in a changing economy.

Strong credit decisions account for more than just the numbers on an application. They require a forward-looking approach—one that acknowledges that even the best borrowers can struggle in the wrong environment. Understanding conditions isn’t about predicting the future, but about preparing for its uncertainty.

Would love to hear—how are you adjusting your risk approach given today’s market conditions?