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Younger individuals might be good PRBC candidates

Feb 18, 2013 Sean Albert

People from all walks of life visit lenders for their financial needs. Whether they have a hearty salary or live a paycheck-to-paycheck life, many men and women of any ethnicity and in a wide age range have frequented such businesses. However, lenders may have noticed that they see a certain type of would-be borrower more than others at their headquarters.

This could be because a number of people head to these storefront locations after they have exhausted other options, including opening traditional lines of credit via credit cards. A recent study out of Ohio State University revealed that the majority of those who find themselves in significant credit card debt are younger Americans.

Thirty-somethings tend to have significant debt
The report explained that people born between 1980 and 1984, tend to have debt that is $5,689 higher than that of their parents (adults that were born between 1950 and 1954) and $8,156 higher than their grandparents, or those who were born from 1920 to 1924. Professor and co-author Lucia Dunn noted that when this young generation is elderly, the trend snowballs into a greater burden.

This could also be an issue that occurs at certain times. For instance, many people are bogged down with debt in the 10 to 20 years after they graduate from college because of student loans with high interest rates. Moreover, Fox Business reported that numerous individuals have to take serious steps to clear their debt following the holiday season.

Also take longer to pay off debt
The Ohio State University study also found that the individuals that tend to be in debt take significantly longer to pay off the owed amounts. The younger group pays off their debts 24 percent slower than their parents and 77 percent slower than the grandparent sect.

While this report might initially seem to imply that consumers need to consider amending their debt management practices, this can also present a good jumping off point for many lenders. Because carrying and rolling over large amounts of debt for a long time can adversely affect an individual's credit score and history, traditional loan organizations, like banks, might be hesitant to give out another loan to these people.

If the credit score is an issue, alternative lenders can expand their view of these borrowers and use their Payment Reporting Builds Credit (PRBC) score as qualification for a new loan. This not only allows patrons to access the cash flow they need, but it can help a lender reach new demographics and widen his or her target market, leading to more opportunities and, ultimately, increased revenue.