“Nonprime Americans” — those with credit scores below 700 — are likely to be hit harder financially, and more frequently, by unexpected expenses such as a major car repair or health emergency like a broken arm.
A new study from Elevate’s Center for the New Middle Class finds that 60 million Americans come under the nonprime category. The study found that many common expenses, such as covering the out-of-pocket on a broken arm, an apartment security deposit, or replacing a vehicle transmission, cost more than $1,400.
Almost half of nonprime Americans have more than three disrupting expense events per year, compared to approximately one-quarter of primes (those with credit scores above 700).
“A bill becomes a crisis for nonprime Americans at $1,400. For Prime, it’s $2,900,” the study said. “An unexpected expense becomes a significant disruption to prime Americans when it is 53 percent of their monthly income. Nonprime Americans can only swallow a 31 percent impact to their income.”
Elevate’s findings are based on a 10-minute online questionnaire surveying 502 nonprime and 525 prime Americans.
Jonathan Walker, executive director of Elevate’s Center for the New Middle Class, said. “Unfortunately, it happens all too often, simply because nonprime Americans don’t have the available resources to help absorb some of these financial shocks. This can cause a downward spiral on their daily finances as well as their credit history.”