Consumers Unable To Access Equity, Recent Survey Finds
A recent Bankrate survey reveals that rising interest rates have created significant barriers for Americans seeking loans and financial products. Since the Federal Reserve began increasing its benchmark rate in March 2022 to combat inflation, nearly half of all applicants have been denied, according to the survey. This trend affects various credit lines crucial for managing higher living costs, including new credit cards, personal loans, and debt consolidation loans.
The survey highlights that 17% of applicants have faced multiple rejections. This denial of access to credit has had a profound impact on personal finances, with over 82% of those denied reporting negative consequences. As a result, nearly a quarter of denied applicants have resorted to high-cost alternatives like payday loans, which can have interest rates as high as 650%.
The difficulty in accessing credit is particularly severe for those with lower credit scores. Applicants with poor credit (scores between 300-579) experienced a 73% denial rate, while those with fair credit (scores between 580-669) faced a 63% denial rate. Even individuals with good credit (scores between 670-739) saw more than half of their applications rejected. This trend underscores the tighter lending criteria that have accompanied the Federal Reserve’s interest rate hikes.
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