The survey from 1,000 borrowers by open banking firm Tink discovered that a third were running out of money before the end of the month.
To cover essential spending, around a quarter are using credit cards, 23% are leveraging instalment or delayed payment options and 16% are using loans.
The report said that due to heightened rejections many consumers were having to go to “greater lengths” to secure borrowing.
More than one in ten of borrowers surveyed said that when refused a loan, they reapplied with a different lender.
A further one in 10 said they have exaggerated their income in their application.
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Around 9% noted that they have “underreported” monthly outgoings when applying for finance and 8% sought a loan from an unregulated lender as they could not go elsewhere.
Rejected applications on the rise
According to a parallel survey of 200 UK lenders, 58% of lenders have reported seeing a greater number of rejected applications due to people failing to meet affordability criteria.
Meanwhile, over a third of lenders also reported a rise in application documents being edited, implying that mortgage fraud to increase apparent income and reduce outgoings are becoming more common.
The report continued that 82% of lenders agreed that the cost-of-living crisis makes affordability checks “more important than ever” and over three quarters acknowledged the need to improve risk decisioning models to give a more “accurate view” of people’s finances.
Tasha Chouhan, UK head of banking and lending at Tink, said: “With many traditional credit checks making it difficult for people to gain access to loans, those who most need financial support are resorting to desperate measures.
“By prioritising investments in data-driven lending models, lenders can make more informed credit decisions to widen credit access to those who can afford it, while protecting struggling borrowers from getting into financial distress.”