Oportun Financial: New Study Shows Persistent Credit Myths Contribute To Hard-Working Americans’ Limited Access To Affordable Credit
While half of Americans said they rely on credit cards to get through the month, many lack a basic understanding of how to build, use, or maintain good credit.
SAN CARLOS, CA-October 18, 2021-Oportun (Nasdaq: OPRT), an AI-driven financial services and technology company that gives hard workers access to responsible and affordable loans, today shared the results of a new survey that found that many Americans depend on credit cards as a vital financial tool. , a limited understanding of how to obtain and properly manage cards could hamper their access to more affordable credit options.
This is especially troubling because hardworking people, forced to rely on expensive credit card products due to poor or insufficient credit history, often pay more interest and fees than other Americans. In fact, according to the Financial Health Network’s FinHealth Spend 2021 report, financially vulnerable households and vulnerable households spent around $ 90.5 billion in fees and interest – or 87% of the total market – on consumer credit cards. general in 2020.
New survey data from OnePoll, collected on behalf of Opportunity, revealed several behaviors that likely contribute to this uneven burden and limit people’s ability to create credit, unlock more affordable credit options, and enter. in the general financial public:
Those with credit cards have taken an average of two cash advances, which is likely to lower their score;
Almost a quarter (24%) of credit card holders admitted paying less than the minimum amount owed or making no payment, and 43% paid only the minimum amount owed;
Thirty-nine percent (39%) of credit card holders regularly use more than 30% of their available line of credit;
More than two in five struggle to keep up with the credit cards they hold (44%) and a similar amount admits they are so in debt they don’t even know where to start paying them off (41%) .
Unfortunately, despite 54% of them saying they were confident in how to build their credit, the survey showed that people still regularly fall victim to lingering credit myths such as:
All debt is bad debt (35%);
Checking your credit report will lower your credit score (24%);
Debt repayment clears negative history (late payments, missed payments, etc.) (21%);
Credit scores are the only thing lenders consider (21%);
Closing a credit card will increase your credit score (18%).
“For consumers without a credit score or who have been badly rated by major bureaus, building good credit is often a costly proposition,” said Matt Jenkins, COO of Opportunity and general manager of its personal lending business. “Additionally, a lack of understanding of how credit works too often creates situations that further hurt the financial health of consumers. The good news is that some lenders are now using artificial intelligence and alternative data to assess true creditworthiness. people who work hard so they can extend affordable and responsible credit to them that helps them get on the mainstream financial path. ”
In August 2021, Oportun launched the Oportun® Visa® credit card after a successful pilot that now has more than 75,000 customers. Unlike other card products that are available to financially responsible people with little or no traditional credit history, the Oportun card is unsecured and offers starting lines of credit of up to $ 1,000. The Oportun card builds on the company’s success in providing affordable credit to people outside of the financial general public to offer funds on demand and the ability to create credits faster.
Since its founding, Oportun has successfully provided over 4.3 million loans and $ 10.5 billion in credit, mostly in the form of small dollar loans, saving its clients over $ 1.9 billion. dollars in interest and fees compared to other options generally available to people with little or no credit. the story. By reporting repayment performance to major credit bureaus, the company has also helped over 925,000 people begin to build credit histories.
The OnePoll survey interviewed more than 2,000 people with poor, no or unknown credit. For additional data, please contact Oportun directly at [email protected]. For more information on the Oportun® Visa® credit card, please visit Oportun.com/credit-cards.
Oportun (Nasdaq: OPRT) is a financial services company that leverages its digital platform to deliver responsible consumer credit to hardworking people. Using AI-powered models that are based on 15 years of proprietary customer information and billions of unique data points, Oportun has made over 4 million loans and over $ 10 billion in affordable credit, providing its customers alternatives to payday loans and auto titles. In recognition of its responsibly designed products that help consumers build their credit history, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009.