Popular retailers are interested in customers with a low credit rating
Retailers, including Walmart, Forever 21, Urban Outfitters and thousands of others, suddenly turned their attention to 68 millions of low-credit Americans.
Americans with low credit ratings are considered risky borrowers due to the fact that they do not pay the bills or do not have a credit history.
In recent years, many financial and technological companies have entered the American market, which have complex algorithms in order to better predict which customer will pay and which will not. And it is through them that retailers give loans to customers with a bad credit rating. Such companies also assume the credit risk in case of non-payment of debt by the client.
This year, Zebit, which positions itself as “Amazon for the Poor”, spends hundreds of thousands of dollars on marketing to stand out as the only company targeted at high-risk consumers.
As it turned out, he is not alone.
In February, Walmart signed an agreement with Affirm, a payment option when placing an order that allows buyers to pay for purchases on an installment plan, from 3 to 12 months, with percentages being indicated in dollars, not in percentages. This firm offers such lending services to people with a low credit rating.
Affirm is part of a growing group of companies, including Afterpay, QuadPay, Klarna, UpLift and Splitit, which claim that they are more transparent in terms of fees and interest they charge.
They advertise a similar business model: buyers receive the goods in advance, and not after they finish paying.
Experts say that the race for risky buyers is due to a strong economy.
“The primary market could grow so much that lenders are interested in reaching as many consumers as possible, especially during good times,” said Ted Rossman, an analyst at CreditCards.com, which tracks the credit and debit card industry.
Of course, everything has its price.
“Most of these programs are looking for consumers who are poor at math,” payment card consultant Robert McKinley of RAM Research told The Post. "They usually charge 20-30 percent more for merchandise and may have additional hidden costs."
Zebit claims it does not position its prices as the lowest.
“We tell the client that our price is not the best,” Schneider told The Post. "Our biggest challenge is overcoming the feeling that it's too good to be true because the whole industry is baited."
On some subjects, especially electronics, they earn much more here.
Zebit's 4 Apple Watch is $ 517 compared to Apple's $ 399, and the Stanley 150 Toolkit is $ 117,99 compared to Walmart's $ 99,99.
Consumers must also disclose personal information, including their income and employment, to start shopping. According to the company, it is necessary to control non-payment.
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