Your Key to Understanding Nonprime Consumer Behavior

You’ve heard it before: Nonprime consumers can have a difficult time securing traditional credit. The millions of Americans who fall into this bucket lack the credit history they need to secure a traditional loan. Maybe they’re a young person who has never taken out a loan before. Maybe they’re a creditworthy consumer who encountered a destabilizing financial event, like a job loss or unexpected medical issue. Or maybe they’re a consumer who needs cash quickly but doesn’t have time to wait to be approved for traditional products.

Whatever the reason may be, a nonprime consumer can often viewed as a single, uniform segment of the population. The circumstances behind each consumer’s credit history is different, and they should really be looked at as a unique applicant. When a lender fully understands the reason behind a consumer’s borrowing habits and the type of loans they’re seeking, they can better align the consumer to the credit products they need.

Experian’s Clarity Services provides lenders with alternative credit data that enables them to make better risk management decisions. Going on four years now, Clarity has analyzed the trends and financial behavior of nonprime consumers by looking at application and loan data in Clarity’s specialty credit bureau from 2014 to the present.

A study sample of more than 350 million consumer loan applications and more than 25 million loans was created and leveraged to evaluate market trends during this period. Data from Experian’s national credit bureau was also used to help profile consumers.

We’ve taken all of this valuable information and packed it into one, incredible useful report – Clarity’s Alternative Financial Services Lending Trends Report. From market trends to changes in loan characteristics to consumer demographics, you get a holistic view of nonprime consumer market trends and can better understand the consumers you serve every day.

Below is a preview of some of the insights this report offers:

The proportion of loans with loan amounts greater than $2,500 has increased from 16% in 2018 to $21% in 2019.
The proportion of loans with a repayment length longer than 7 months has increased from 62% in 2018 to 74% in 2019.
In our ranking of states by loan count, Michigan is continuing to increase on the charts. Michigan was ranked #13 in 2015 compared to #4 in 2019. Ohio quickly dropped from #3 in 2018 to #7 in 2019.

Our upcoming Lending Trends Report, coming in April 2020, has been the go-to resource for lenders and anyone seeking true insights into nonprime borrower behavior, alternative credit data, alternative financial services and more.

Sign up here to be the first to know when the report will be available to download.

About Experian’s Clarity Services

Experian’s Clarity Services specializes in alternative financial services data and solutions. Clarity’s suite of FCRA-regulated reports and scores give lenders visibility into critical subprime consumer information, including the thin-file and no-file consumer segments. Clarity is dedicated to making alternative financing services more accessible, trusted and effective for the clients and consumers it serves.