40 Percent of Millennials Use Installment Plans to Improve Credit Scores
A recent PYMNTS Intelligence study found that 60 percent of U.S. consumers used installment plans to purchase products in the last year, many of whom do so with the goal of improving their credit scores. This is especially popular among millennials, as 40 percent of them use installment plans to boost their credit scores.
Installment plans have become a prominent payment method for consumers, as they allow them to pay for their purchases over time without accumulating credit card debt. At 27 percent, general purpose credit card installment plans are the most popular plans consumers use for boosting credit scores, followed by store card installment plans and buy now, pay later (BNPL) plans, at 23 percent and 22 percent respectively.
Improving credit card scores is especially crucial in the U.S., where approval for a mortgage or student loan can be contingent on a good credit score. Strong credit scores can also give consumers access to lower interest rates, as well as better borrowing terms.
Additional data from PYMNTS shows that consumers with credit scores of 650 or less are nearly twice as likely to experience issues that affect their finances and daily lives. 80 percent of consumers surveyed in “The Credit Accessibility Series: BNPL’s Wide-Ranging Impact on Consumers and Merchants” have experienced financial hardship due to low credit scores.
Subprime consumers can also alleviate financial distress by improving their credit scores, as it would help them to raise their living standards and avoid high-interest-rate loans. Strong credit scores in general make it easier for consumers to afford essentials and access more credit products.