Report sheds light on 51 million underbanked

FactorTrust Chief Executive Officer Greg Rable defines the underbanked as people who have existing banking relationships, usually in the form of checking accounts, but for various reasons lack traditional credit options. To better define the approximately 51 million underbanked individuals in the United States, FactorTrust, which analyzes underbanked consumer data, issued the inaugural FactorTrust Underbanked Index.

Based on information gleamed from consumer-initiated credit inquiries and trade-line data from a variety of financial services companies, and augmented with other third-party data, FactorTrust found that:

• The average age of loan applicants was 30, with loan amounts trending upward based on the age of applicants; loan amounts peaked for applicants aged 45.
• Underbanked consumers average two years at the same home address, with 66.53 percent being renters.
• Females make up 62.05 percent of underbanked loan applicants, although average loan amounts for males was slightly higher: $559.99 to $530.57.
• 33.06 percent of the underbanked having a bachelor's degree or higher; those with degrees outperformed on repaying loans by 11.50 percent over loan applicants with high school educations or less.
• The average length of employment for underbanked consumers is 2.10 years, with the top employment sectors being retail (24 percent) and government (17 percent).
• The average monthly income for underbanked consumers is $3,061.08.
• Married underbanked individuals had a nearly identical loan default rate as single individuals (21.1 percent to 21.3 percent).
• The percentage of the underbanked defaulted on first payments to three of the top five banks at a rate of 13.89 percent to 22.97 percent; to four of the top 15 retailers at a rate of 18.57 percent to 28.01 percent; and to one federal government agency at a rate of 20.27 percent.

"We do not define an underbanked consumer by a score or by any combination of our 500+ attributes," Rable said. "All of the consumers in our database are considered underbanked because they have sought alternative credit options."

FactorTrust intends the Underbanked Index to be a quarterly report. A copy of the Demographic Edition of The FactorTrust Underbanked Index can be viewed at ws.factortrust.com/UnderbankedIndex/.

Editorial Note:

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