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Second Annual Snap Finance Study Shows The Effect of Subprime Credit Scores

Elite Personal Finance

Last Update: March 17, 2025 • Financial News •

Snap Finance, a fintech offering lease-to-own and credit solutions focusing on auto machine learning rather than traditional credit scores, has released a new study on shopping behaviors and issues facing 30% of consumers with credit scores below 670.

According to its research, subprime borrowers in the United States have increased by roughly 1.25 million over the last year. This is due to ongoing changes to inflation, macroeconomic conditions, the number of financing options, and elevated interest rates in the market, which affect everyone’s ability to purchase everyday goods like milk, eggs, and poultry.

According to the report, 35% of credit-challenged consumers rely on financing to make ends meet, up 4% year over year. Secondly, 78% of those with credit scores below 670 have been turned down for financing. Other statistics show that 70% of those with friends’ credit scores are cutting down on non-essential expenses.

“Snap’s second annual survey illuminates the struggles millions of Americans face and highlights the growing importance of alternative financing solutions that can meet the needs of an increasingly diverse consumer base,” said Snap Finance CEO Ted Saunders. “As the landscape evolves, we remain committed to leveraging technology and insights to help foster a more robust retail financial ecosystem for consumers.”

In total, 29% of consumers have a FICO score below 670, with additional report stats noting key demographics of consumers, such as 30% being millennials, 54% being renters, 39% working full-time, and 66% having an income below $50,000.

Status on Subprime Borrowers

According to Snap Finance, roughly 47 million Americans are subprime borrowers, classified as individuals with a FICO score below 670. Snap Finance’s eBook also highlights that credit scores significantly impact shopping habits and preferences. For example, 77% of people with credit scores below 670 shop around for the best deals, compared to 85% of those above 670.

Furthermore, 70% of consumers with credit scores below 670 purchase fewer non-essential items due to economic concerns, compared to 59% of those with scores of 670 or higher.

Other sections within its consumer study also highlight how credit challenges influence financing options and preferences. For example, 35% of subprime borrowers rely on financing, which is up 4% year over year. At the same time, within the last 5 years, 42% of credit-challenged consumers have used installment loans, and 24% have used lease-to-own financing, representing a 2% increase versus the prior year, which is the benefit broadly shared by Millennials and Gen Z.

Why Alternative Financing Matters for Subprime Borrowers

With most traditional lenders relying on credit scores, subprime borrowers often face limited credit options. For example, nearly 80% of individuals with credit scores below 670 have been denied traditional financing, leading many to turn to alternative programs like lease-to-own, which offer flexible pay-over-time solutions.

What’s the Difference Between BNPL and Lease-to-Own?

I mistook you for a minute. Consumers may think that popular alternative financing options Klarna and Affirm are the same lease-to-own options Snap Finance offers.

For starters, Klarna and Affirm are Buy Now, Pay Later (BNPL) services that allow consumers to split purchases into equal installments; I already have to pay the whole, or something balanced up front with scoring criteria that take into consideration alternative data points like transaction history. Thanks to these programs, prime and subprime borrowers can bypass traditional credit cards and loans and make large-scale purchases they wouldn’t otherwise think to do.

In turn, lease-to-own programs allow subprime borrowers to make scheduled payments, with full ownership of the item granted at the end of the lease term.

Today, Snap Finance, Progressive Leasing, and Acima Credit are three of the least popular providers. Each of these providers offers its own options regarding payment flexibility, approval times, credit checks, and early purchase options with or without fees. Plus, most of them offer no traditional credit check, even including an early payoff discount on occasion.

Both of these services allow credit-challenged consumers to purchase items without worrying about paying the full balance upfront. However, in the case of lease-to-own, ownership is assumed only after adhering to all lease terms and remaining payments made, an excellent choice for those with a limited credit history.

What Are the FICO Credit Scoring Ranges?

FICO is the most widely used credit scoring system in the US. FICO scores represent your creditworthiness to virtually every lender, from auto lenders to mortgages. This is based on the weighted system, which considers your payment history, the length of credit history, credit mix, and new credit, with 35% assigned to payment history and 30% to the amount owed.

Scores are classified into five main groups: Exceptional (800–850), Very Good (740–799), Good (670–739), Fair (580–669), and Poor (300–579). Those with excellent credit scores enjoy the best interest rates and payment terms. Conversely, those with 300 to 579 credit scores struggle to obtain credit, paying interest rates upwards of 35.9% for bad credit loans.

As Snap Finance articulates, subprime borrowers play anyone with a FICO score below 670.

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