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Subprime credit is a major problem in the United States. It means that a lot of Americans are unable to improve their financial situations. This puts them at risk of being victims of predatory credit card issuers who are offering their credit cards at exorbitant interest rates and fees.

NerdWallet studied the subprime market and wrote the 2016 edition of its yearly Consumer Credit Card Report based on its findings. In the process, they discovered how consumers can recognize important trends in the credit card industry, and they did this by examining the issue internally and externally to illuminate the difficult issues. From there, they found inexpensive ways that consumers with subprime credit can conduct themselves financially in the future.

Deep Subprime Credit

A consumer who has “deep subprime credit” is someone with a credit score equal to 600 or below. These are people whose credit has been damaged in some way, and they find it difficult to obtain credit because of it. When they do manage to obtain credit, the terms are highly unfavorable to them. Because of their low credit scores, they pay higher insurance premiums and may be unable to rent an apartment or qualify for a home loan.

Some credit card issuers target people with subprime credit. When consumers take advantage of these offers, they are treated to fee structures and credit card agreements that are extremely complicated. If they accept credit from deep subprime credit lenders, they are receiving a card that costs them hundreds of dollars in fees.

Who Has Subprime Credit?

An astounding 48 million people in the United States have a credit score that is below 600. This includes about 30 million millennials. To put it another way, we can say that 20.7 percent of consumers have subprime credit scores. Although this seems bad, we can report some good news. There are fewer people with subprime credit now than in the past 10 years.

The millennials appear to be disproportionately affected by subprime credit. According to the study, researchers found that 43 percent of millennials have credit scores below 600. This means that 30 million millennials have no credit history or very damaged credit.

Nerdwallet’s credit expert Sean McQuay stated that consumers who have the highest credit scores receive the best loan terms and the lowest insurance rates. They also are given more “perks.” In contrast, low credit scores are the reason that people are paying thousands of dollars for their loans rather than hundreds.

The Bright Side

All hope is not lost. There are things that you can do to improve your financial future. First, learn what your credit score is so that you can fix any problems that you find. You can purchase your credit score from Experian, TransUnion or Equifax.

If you discover that your score is between 300 and 689, you will need to work to improve it. You can do this by paying every bill before it is due. Also, reduce the amount of debt that you owe. Make a commitment to doing these things, and your credit score will go up over time.