Non-prime Americans: The Hidden Cost of Being Non-prime

Introduction

The broad discussion in many circles about the plight of the nonprime consumer often uses assumptions about how these consumers think, what matters to them, and even what would be good for them. However, there is limited data that really explains their circumstances.

We sought to understand the differences in attitudes, experiences and behavior between consumers with prime credit and those with nonprime credit.

This study represents results from a survey of 502 nonprime Americans with 525 Americans with prime credit scores, using interviews conducted June 27- July 1, 2016.

Executive Summary

Nonprime status affects other parts of a person’s life

  • Six times more likely to have been denied a job in the prior 12 months because of low credit
  • 12 times more likely to have been denied an apartment in the prior 12 months because of low credit

Nonprime status can create headwinds to financial progress

  • Nine times more likely to have been turned down for credit in the prior 12 months
  • 10 times more likely to say they couldn’t “make financial progress” because of low credit.

Nonprime Americans show vigilance in watching their credit

  • Much more likely to be focused on building credit when borrowing

Nonprime Americans can feel fragile

  • More likely to deny themselves of comforts to save money
  • More likely to believe their finances will worsen

More likely to say life is worse financially than when they grew up

Nonprime access to credit

Nearly half of nonprime Americans have been turned down for credit in the prior 12 months. This is nine times more often than prime Americans.

It’s not just about the cost of credit, but the actual access to credit.

Turned down for credit

% Top-2 Box: Strongly Agree/Agree

Lack of credit can hinder financial progress

Not being able to access credit causes a third of nonprime Americans to believe they are barred from making financial progress: 12 times more likely than prime Americans.

I can’t make progress because of lack of credit

% Top-2 Box: Strongly Agree/Agree

Poor credit can affect peoples’ livelihood

In the prior 12 months, nonprime Americans were six times more likely to be denied a job because of a lack of credit compared to prime Americans.

Denied a job because of lack of credit

% Top-2 Box: Strongly Agree/Agree

Poor credit can affect where people live

In the prior 12 months, nonprime Americans were six times more likely to be denied a job because of a lack of credit compared to prime Americans.

Denied an apartment because of lack of credit

% Top-2 Box: Strongly Agree/Agree

Nonprimes are much more likely to be focused on building credit when borrowing

Nonprime Americans want their borrowing to contribute to building a stronger credit score. Seven in 10 feel it’s extremely important.

The loan helps me build my credit score

% Extremely important

Over half of nonprimes focused on saving money

Nonprime Americans are 52 percent more likely to deny themselves basic comforts in the effort to save money.

I deny myself basic comforts to save money

% Top-2 Box: Strongly Agree/Agree

Nonprimes are more likely to feel their finances will worsen

Nonprime Americans are more likely to feel susceptible a worsening financial situation.

I often worry that my financial situation will worsen

% Top-2 Box: Strongly Agree/Agree

Nonprimes are more likely to say current financial situation is worse than when they grew up

Nonprime Americans

“Subprime” is often used to represent people with scores below 640. People with 641 to 700 are sometimes called “near prime.” We have elected to use the clearer designation of “nonprime” for all consumers with scores below 700.

“Nonprime Americans” represent the New Middle Class. These are Americans with a credit score below 700, meaning that their access to credit is limited or curtailed. It is the Center’s objective to better understand their experiences, attitudes, and behavior.

Methodology

The primary purpose of this study was to determine how nonprime consumers were similar or different from those with prime credit on a range of attitudes, behaviors and experiences.

Interview Dates: June 27 – July 1, 2016

Sample Specs:

  • Total Consumers = 1,027 (Nonprime = 502; Prime = 525)
  • Sample Source: Research Now Consumer Panel Qualification Criteria:
  • Ages 18-64 • Personal income: Any
  • Geography – U.S. Rep • Has primary or shared responsibility managing HH finances
  • Employment: No students or unemployed
  • Has a checking or savings account

Survey Instrument: 10 minute online questionnaire

Arrows indicate statistical significance at 90%

Article By:

Jonathan Walker

Jonathan Walker

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