22% of young people report having been turned down for traditional personal loans within the past year
Young people, including recent college graduates are struggling more and more in the current economy. The average overall rate of unemployment, at 31 weeks, is at its highest level since the end of World War Two. There were a total of 2.3 million unemployed college graduates in March 2010, 1.45 million more than in March 2007, with heavy layoffs in white-collar sectors such as finance.
According to a February 2010 survey conducted by FindLaw.com, a legal marketing and information site, borrowers who have had little opportunity to build up their credit history are struggling when attempting to get personal loans or qualify for credit cards. More than one in five (22%) people between the ages of 18 and 34 have been refused a mortgage, personal loan or credit card within the last year. That's more than twice the percentage of any other age group. Young people are four times more likely to report that they were turned down for a personal loan than are people over the age of 55.
More specifically, 4% of survey respondents state that they have been turned down for a mortgage, a home equity loan, a personal loan, car loan, or a student loan within the past year. Of those surveyed, 2% have been turned down for mortgage refinancing or a small business loan and 1% for a home improvement loan. The numbers shoot up however, when it comes to credit cards. A significant 15% of those surveyed were turned down when they applied for a credit card in the last year.
More young people have been turning to non-traditional lenders for personal loans. While banks - the traditional source of credit have struggled and sometimes failed altogether - credit unions, small banks, private money lenders and finance companies often still have the ability to make loans and be more flexible in the approval process.
The "Bank of Mom and Dad" is often closing as well. Young people are not alone in experiencing financial difficulty in the current economy. Many families, especially those classified as "upper-middle-class professionals," are finding themselves suddenly downwardly mobile. While in the past two decades, families used rising incomes, stock market returns and rising home values to help pay for college and to help kids get started in their lives and careers, pay cuts and layoffs in almost every sector of the national economy, coupled with low returns (or even losses) from investments mean that many families find themselves unable to financially assist their children, at a time when they often need a financial helping hand more than ever.
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