According to recent data released by Experian nearly 1 in 3 consumers – or 30% of those included in the analysis – have a subprime score, but this population has shrunk by 12% since 2020. These individuals have an average of $4,592 in credit card debt, $19,106 in auto-debit, and 2.6 credit card accounts. And those with low scores between 300 and 600 are most likely to be denied access to lending.
This struggle is often felt by those who are young, new, and on their own. However, due to the ups and downs felt across the globe over the past two years, this struggle has hit many others as well. Very, very few people enjoy an “excellent” credit score (between 781 and 850), according to data from Experian.
There are many factors that impact an individual’s credit score, with derogatory marks being some of the most devastating. Things like bankruptcies, late payments, and collection accounts can severely affect a credit score – and remain on a credit report for up to seven years. Bankruptcies are one of the worst marks a consumer can have on their report.
Credit Changes During the Pandemic
The quick snapshot was taken during the turbulent period of the pandemic actually shows an increase in average credit scores in the U.S. This is largely due to the shift in consumer spending and saving, and how lenders adapted and worked with borrowers during that time. Now that certain COVID-19 relief programs are over, finances will shift over the coming months.
As time goes on, and consumers continue to manage the impacts of the pandemic, credit scores will more than likely change once again. Many individuals may find they have financing needs but lack the score to secure the needed funds. This is where knowing your options is incredibly important.
Running a Business with Bad Credit
Having bad credit doesn’t have to stop your plans. If you’re looking to start a business or scale an established business’ operations, you’ll need merchant services like a merchant account. In the past, it has been next to impossible to secure these services with bad credit. Today, the answer lies in partnering with a high-risk processor.
A high-risk merchant account provider can offer you a merchant account that is tailored to your business and industry’s unique needs. They will (should) have years of experience in helping merchants with bad credit secure the services and tools they need to operate smoothly and grow. One of the biggest benefits is that these providers are also known for the fast, hassle-free setup process – you can gain access to a bad credit merchant account with instant approval in as little as 24 hours.