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The findings directly contradict arguments by some lenders that Colorado should raise its interest rate caps to expand credit access to subprime borrowers.
"High-priced loans are not the answer for Coloradans already financially strained by high prices of housing and food, and wages that haven't kept up," said Candice Wang, a senior researcher at the center and report co-author.
The research examined checking account transactions, bankruptcy filings, state lending data, and interviews with borrowers and financial counselors. It found that more than half of the 135,000-plus supervised loans issued by larger lenders in 2022 and 2023 went to subprime borrowers—those with credit scores below 660—according to Colorado Attorney General data.
However, those loans often created financial hardship rather than stability. More than 10 percent of the 3,300-plus consumer bankruptcy cases closed in Colorado in 2023 listed high-cost lender OneMain as a creditor, making it one of the most frequently cited creditors behind only major banks, credit card companies, and tax agencies.
The average bankruptcy case listed more than 20 creditors.
Subprime borrowers were 30 percent more likely than prime borrowers to fall 1-59 days behind on loan payments and 41 percent more likely to be 60 or more days past due or have loans charged off, according to 2023 Attorney General data analyzed in the report.
