80 Million Consumers Lack Reliable Credit Access, Report Finds

A recent PYMNTS report in collaboration with Sezzle entitled “How Credit Insecurity Is Changing U.S. Consumers’ Borrowing Habits” found that 31 percent of U.S. consumers—nearly 80 million individuals—are considered credit insecure. These individuals lack access to credit or have less options to fix their finances and often risk opting out of credit entirely.

Consumers who are credit insecure can be divided into two groups: the credit marginalized, who lenders have denied at least once in the past year when applying for credit products, and the credit avoidant, or those who have no interest in using credit products and do not apply.

The report found that in the past year, major life events like a change in employment, illness, or death of a loved one negatively affected 79 percent of credit insecure consumers who have been rejected by credit providers. One major life event could lead a consumer to become credit avoidant.

Additionally, concerns about making monthly payments regardless of facing financial hardships can cause credit marginalized consumers to become credit avoidant. Consumers are often hesitant to apply for new credit due to low credit scores and fear of rejection. If they fail to find ways to improve their credit scores, they could become credit avoidant and shrink the market for lenders of new products.

The report also found that very few consumers knew how credit works, or knew how products like buy now, pay later (BNPL) can improve their credit scores. Other key findings showed that consumers exist on a credit continuum, and many factors can push individuals into credit insecurity.