Make Ends Meet: High prices paid by unserved and underserved
LOUISVILLE, Ky. (WAVE) - The signs can be seen pretty much everywhere in WAVE Country, for check cashing, money orders available or pawn shops.
Financially underserved or unserved families pay a high price for these services, often making it even harder to make ends meet.
It costs a lot of money to not have money, because when you don’t have a credit score, you may not have access to bank accounts, loans, and credit cards.
Those who fall into the category of underserved or unserved are usually people who either cannot get credit or who do not understand the importance of their credit scores
“Credit is really important in a consumer’s life, especially for that economic advancement and economic mobility,” Nidhi Verma, Vice President of International Research and Consulting for TransUnion said.
Credit is a consumer financial power. In today’s world, the importance of having credit and a good credit score cannot be overstated.
“45 million Americans are either unserved or credit underserved,” Verma said. “Breaking it down, 8.1 million of them are credit invisible. When you look at the other 37 million Americans, they are credit under-served because they have very little participation.”
These are consumers who do not have a bank account or who do not use mainstream financial services and primarily conduct transactions in cash.
With a lack of credit, how do you get that first credit card or car loan?
“Credit score is a picture of you as a consumer and the risk that you intel,” Verma explained.
Many lenders are hesitant to extend credit to consumers without any credit history or score. Having no credit score can be the equivalent of having a poor credit score.
Assuming someone has recurring expenses, ask those companies to report on your behalf such as rent, utilities or your cell phone bill.
Verma lists three things someone can do to get credit and build credit:
- Most importantly, understand your credit report. Get access to your credit report. Make sure you are looking at it on a regular basis. Not a one and done.
- Secondly, make your payments on time. If you are going to miss any of those payments call your lender. They may be able put you on a payment plan that is more affordable.
- Lastly, do not overextend yourself beyond your financial capacity that you have to manage your credit.
There are a number of things someone can do to move themselves from underserved or unserved to being able to access financial services.
There are digital banks. People can find one to fit their needs.
Begin to build a credit score by paying rent, gas and electric or cable bills on time and having those companies report your payments.
People can also try a secured or prepaid credit card. They report to all three major credit bureaus, and customers will not be able to overspend.
To look at the in-depth research study on the unserved and underserved credit market, click or tap here.
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