We’ve heard a lot about the shrinking middle class. Despite an economy with the highest level of corporate profits in years and record employment levels, people are struggling financially. Economic gains have mostly gone to those already well-off. Many of the newly created jobs boosting employment numbers are in low-paying service and retail positions. Wages overall have largely remained stagnant.

No wonder roughly one-third of Americans have zero dollars saved for retirement.

Rising levels of credit card debt held by consumers is a worrisome development associated with these trends.

According to Nerdwallet.com, the total amount of credit card debt held by Americans this year is $420.22 billion dollars, a 5 percent increase over 2017’s total.

The average household amount is $6,929. And the cost of servicing that debt is expensive: interest payments on revolving credit card debt will average $1,141 per household this year.

That’s money that could be going into retirement savings instead.

So it’s not surprising that this year’s annual Financial Stress Survey showed that 69 percent of employees are experiencing moderate to extreme stress over their financial situation, a 3 percent increase over 2017.

And many of these hard-working Americans have nonprime credit scores, defined as less than 700.

In the United States alone, over 160 million people are included in this category. While “middle class” has historically referred to people who work in blue-collar or labor jobs, today the term includes white-collar workers such as nurses, teachers, allied health care providers, and government employees.

Almost half (45 percent) of these employees are considered non-prime.

Credit scores have become a potential barrier in achieving and maintaining financial stability for many Americans, especially for those with lower incomes.

Originally used to determine creditworthiness for a mortgage or loan, credit scores are increasingly being used to determine not only pricing premiums for credit, insurance, and utilities, but to predict character and future behavior in screening potential tenants and employees.

A low credit score now has the potential to deny an individual access to housing, employment, or insurance.

In fact, people with a nonprime credit score are six times more likely to have been denied a job, nine times more likely to be denied credit, and 12 times more likely to have been denied an apartment in the prior 12-month period, according to a study conducted by Elevate.

Many of these employees watch their finances closely, have a budget, and are working to rebuild their credit.

It’s often a combination of factors such as medical bills, car repairs, and other financial emergencies that have tipped them into nonprime territory.

In other words, they are not in their financial situation because of poor spending habits, ignorance, or carelessness.

Compared to those with prime credit scores, nonprime Americans are 52 percent more likely to deny themselves basic comforts to save money.

The problem is often lack of credit, such as a “thin” credit file and lack of opportunity to demonstrate creditworthiness. And of course, the higher interest rates and fees nonprime consumers pay don’t help. It’s a challenging, chicken-and-egg type of problem.

How can people escape from the downward spiral of nonprime credit?

Read more at 401K Specialist