BROKEN ARROW, Okla. — Rising prices and stagnant paychecks are driving more people to take out personal loans to cover everyday expenses.
A LendingTree study analyzed millions of personal loan requests on their platform and found a growing number of applicants are seeking loans specifically to pay bills.
“A significantly higher number of people are using these personal loans for everyday bills than in the past,” Matt Schulz said.
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Borrowers requesting loans for everyday bills sought an average of just over $4,300. Those borrowers carried an average credit score of 574 — the top edge of the “very poor” credit score range, according to FICO.
Experian notes many lenders choose not to do business with borrowers in the “very poor” range. Those borrowers may also face extra fees or deposits on some credit cards, and utilities may require additional security deposits.
“Given now that we have high prices at the gas pump and the grocery store, whether we’re talking about personal loans, buy now, pay later loans, or other types of loans, people are definitely looking for things that can help them extend their budget in the face of high prices,” Schulz said.
Some shoppers are wary of buy-now, pay-later options as a way to manage finances. Jenni Walker said she sees limited value in the approach.
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“I’m not against a little bit with your credit cards being intentional with that, but yeah, the buy now, pay later probably doesn’t help as a general life habit,” Walker said.
Esther Haynes said she avoids buy-now, pay-later plans entirely.
“I’ve never used it and I strongly won’t use it because I just want to make sure that if I have the money, I spend it when I have it versus getting into a loop,” Haynes said.
For those looking to improve their credit standing, Schulz recommends taking a hard look at spending priorities.
“One of the best things people can do is just be really ruthless with how they prioritize their spending,” Schulz said.
He also advises focusing on reducing interest costs on existing debt.
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“Any steps that you can take to reduce the interest that you’re paying on other debts that you have is a really, really good idea. Also, just a call to one of your lenders to ask for a lower interest rate or to renegotiate some other terms of that debt can be useful as well,” Schulz said.
Free online budgeting tools and nonprofit credit counseling services are also available to help consumers manage their finances.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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