Popular Offers from CNBC Select’s Partners

More details
American Express Cash Magnet® Card
Learn More
Terms Apply
$150 welcome offer, no annual fee, and 1.5% cash back on purchases
IdentityForce® UltraSecure and UltraSecure+ Credit
Learn More
Terms Apply
Sign up for an annual plan and you'll only pay for 10 months
Chase Sapphire Preferred®
Learn More
Terms Apply
Last Call: 80,000 bonus points – Offer ends: 11/08/2020
Citi Premier® Card
Learn More
Terms Apply
60,000 points with qualifying purchases - worth $600 in gift cards at thankyou.com
Blue Cash Preferred® Card
Learn More
Terms Apply
$300 welcome offer (expires 12/10/2020), and up to 6% cash back at U.S. supermarkets
CNBC Select may receive an affiliate commission when you click on the links for products from our partners. Click here to read our full advertiser disclosure.
Advice

The average credit score of a subprime borrower is 578—here's how much income and debt they have

Using data from credit bureau Experian, CNBC Select provides a snapshot of what the average subprime borrower looks like.

Getty Images

With more than a third of Americans having a credit score considered subprime, it's worth taking the time to understand where you stand.

In general, there are five different types of borrowers that financial institutions categorize based on credit score. These categories help them to determine who is the least and most risky to lend money to because it shows them who is more likely to pay back the money they borrow.

If you have a credit score, your profile falls into one of the following categories: super-prime, prime, near-prime, subprime and deep subprime.

For consumers, knowing your classification is important because it determines how easy it is for you to access new credit cards or loans. In addition to prime borrowers having an easier time getting approved for credit, they are also offered the best terms and lowest interest rates. Subprime borrowers, on the other hand, are more limited when it comes to credit because they have a lower credit score.

CNBC Select wanted to narrow in on what exactly the average subprime borrower is dealing with financially. To get a clear idea of what their finances look like, we asked Experian, one of the three main credit bureaus, to share a snapshot of subprime data across consumers. Here is what we found.

Snapshot of a subprime borrower: Their credit score

Experian's most recent data from Q1 2020 shows that subprime borrowers have an average 578 FICO credit score.

On the FICO credit score scale ranging between 300 on the low end to 850 on the high end, a 578 falls under "very poor."

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Exceptional: 800 to 850

Consumers with this low of a credit score will have a difficult time getting approved for new credit, but there are products made for specifically this profile type that can help them build their credit back up. Secured credit cards are similar to traditional credit cards in that you are given a credit limit and charged interest on unpaid balances, but they are easier to qualify for with a low credit score.

Learn more: Why subprime borrowers should think twice before opening a Fingerhut account

Most secured cards require you to make a security deposit upfront (usually $200) that acts as your credit limit and collateral in case you don't pay your bill. After establishing a record of on-time and in-full payments, many card issuers allow you to graduate from a secured to unsecured, or traditional, credit card and get your deposit back.

CNBC Select ranked our best picks for secured cards, and the Capital One® Secured is at the top. It has no annual fee and allows cardholders to qualify for making minimum security deposits of $49 or $99 and still receive a $200 credit limit.

Capital One® Secured Mastercard®

Capital One® Secured Mastercard®
Information about the Capital One® Secured Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.
  • Rewards

    This card doesn't offer cash back, points or miles

  • Welcome bonus

    No current offer

  • Annual fee

    $0

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    26.99% variable on purchases and balance transfers

  • Balance transfer fee

    None

  • Foreign transaction fee

    None

  • Credit needed

    No credit history

See our methodology, terms apply.

Pros

  • No annual fee
  • $49, $99 or $200 refundable deposit
  • Get access to a higher credit line after making your first five monthly payments on time
  • No fee charged on purchases made outside the U.S.
  • Flexibility to change your payment due date

Cons

  • High 26.99% variable APR
  • No rewards program
  • After you apply and submit your deposit, it takes 2-3 weeks to get your card
  • Capital One periodically reviews your account to see if you can be transitioned to an unsecured card, but unlike the Discover it® Secured Card there’s no clear timeline for when this will occur

For those looking for a basic secured card with no annual fee, the Citi® Secured Mastercard® is your best option from a major bank. This card does require the typical $200 security deposit.

Citi® Secured Mastercard®

Citi® Secured Mastercard®
Information about the Citi® Secured Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.
  • Rewards

    This card doesn't offer cash back, points or miles

  • Welcome bonus

    No current offer

  • Annual fee

    $0

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    22.49% variable on purchases and balance transfers

  • Balance transfer fee

    $5 or 3% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

    3%

  • Credit needed

    No credit history

See our methodology, terms apply.

Pros

  • No annual fee
  • $200 refundable deposit
  • Flexibility to change your payment due date

Cons

  • No rewards program
  • 3% foreign transaction fee

Snapshot of a subprime borrower: Their income and debt levels

Subprime borrowers have, on average, an estimated $68,567 yearly income and an average $55,135 in total debt, according to Experian's Q1 2020 data.

Taking a deeper look into subprime borrowers' debt, we can see that they have a mix of credit in their name, including credit cards, store cards, student loans, car payments and mortgages.

Experian provided the below additional data for the average subprime consumer:

  • Credit cards: 2.8
  • Credit card balance across all cards: $5,805
  • Additional retail / store credit cards: 2.2
  • Retail / store credit card balance across all cards: $1,799
  • Student loan balance: $36,389
  • Auto balance: $18,815
  • Mortgage balance: $163,505

While having a variety of credit accounts is healthy for your credit score, failing to make on-time monthly payments on this debt can really set you back. According to Experian, a person might have a credit score in the subprime range if they don't have a lot of credit history or if they have had negative information end up on their credit reports, like late or missed payments.

If you already have a mix of revolving credit (credit cards) and installment credit (student loans, auto loans, a mortgage), focus on paying at least the minimum each month on all your outstanding credit accounts. When you can, we recommend paying your credit card balances off in full each month as well so that you never pay interest.

Learn more: How knowing your credit score can help protect you from a subprime loan

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.