Borrowers who have lower credit scores are increasingly being approved for loans across multiple credit types, a trend that's likely to continue in 2022, according to TransUnion’s latest forecast.
Higher-risk consumers – due to low credit scores or other factors – are making up a growing share of auto and personal loan borrowers. TransUnion said this non-prime lending will benefit the overall consumer credit market.
"During the height of the [COVID-19] pandemic, many lenders pulled back and tightened underwriting to hedge risk in a period of great uncertainty," said Charlie Wise, TransUnion's head of global research and consulting. "Consumer performance, however, has continued to stay strong, which has restored lender confidence. The economy is normalizing and continues to expand, and those signs of renewed strength are encouraging lenders to not just focus on the least risky consumers, but to provide greater access to those persons that may be viewed as higher credit risks."
If you have poor credit history, you may still qualify for a loan as lenders increase their offerings. If you need a personal loan for debt consolidation to lower your monthly payments or for a home improvement project, visit Credible to find your personalized interest rate and get prequalified in minutes without affecting your credit report.
Auto, credit card and personal loans to expand low-credit-score offerings
The number of personal loan originations are expected to increase in 2022, TransUnion's forecast said, creating seven straight quarterly increases even as the year brings higher interest rates. This increase will serve prime and non-prime borrowers, and those with favorable credit scores and also those with lower ones.
The agency also projects that the number of auto loans will rise, too – to 28.9 million from the 28.3 million projected for this year. Non-prime auto loan originations are expected to increase from 9.4 million in 2021 to 10 million in 2022 and gain market share.
Originations for credit cards are projected to slow slightly from 2021 to 2022 for borrowers with poor credit scores. However, they will remain well above credit card origination levels for 2019 and 2020, the TransUnion study shows.
If you're seeking credit card or loan options but have a low FICO score, visit Credible to compare multiple credit cards at once and choose the one with the benefits and loan terms that suit you the most.
Americans look to credit as stimulus money dries up
As federal pandemic-induced stimulus programs conclude, borrowers could soon be looking for more credit options.
"The consumer landscape is starting to more closely resemble the pre-pandemic era," Wise said. "With forbearance programs expiring and stimulus funds drying up, demand for credit is growing and consumers are reevaluating their credit needs – which is a sign of a humming and functioning economy. The year 2022 will mark a continued return to lending in the credit market, which will help fuel the continued resurgence in consumer spending."
If you need a personal loan to help pay off other high-interest debt or are curious about your credit options, contact Credible to speak to a loan expert and get all of your questions answered.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at firstname.lastname@example.org and your question might be answered by Credible in our Money Expert column.