30% of Consumers Struggle to Access Credit Products

About 30% of consumers have low credit scores — 650 or less — that have denied them access to credit products.

These consumers and others are considered to be credit marginalized, according to “The Credit Accessibility Series: The Credit Insecure Need More Education,” a PYMNTS and Sezzle collaboration.

Retailers who work to serve these consumers and help them overcome their credit marginalization can benefit both the shoppers and themselves.

“Our business, on a relative basis, compared to other retail, is pretty strong because we’re there for that consumer when others aren’t,” Upbound Group CEO Mitch Fadel told PYMNTS’ Karen Webster during a panel discussion posted in September.

There is always a huge group of subprime customers out there in the marketplace, Fadel said. Some retailers may not realize this because they don’t see these customers applying for credit and being denied — because subprime customers are unlikely to try to get credit in the first place.

The marketplace is back to more of a normal environment because consumers are no longer awash in cash like they were when they were receiving checks during the pandemic, Versatile Credit CEO Ed O’Donnell said during the panel discussion.

At that time, people didn’t really think about credit when they were making a purchase, O’Donnell said. But today, there’s a greater need for credit than ever before.

“With products or services, you want to be able to, on your own, provide your consumers with choice,” O’Donnell said. “The same holds true when you’re talking about financing — having choice in product is equally important.”

By extending financing to credit marginalized shoppers, merchants can earn the loyalty and repeat business of those customers, Bruce Weinstein, CEO of Concora Credit, formerly Genesis Financial Solutions, said during the panel discussion.

“For the near-prime and subprime customer, they really appreciate that access to credit,” Weinstein said. “So, we spend a lot of time and energy because all of our products are revolving, meaning once the customer is approved, and if they are in good standing, they have an open credit line. We spend a lot of time and energy driving people back into those stores.”