Tag: alternative credit data
Learn how expanded FCRA-regulated data can be used to gain a more powerful and complete view of consumers' financial situations. Read more.
Millions of consumers are excluded from the credit economy, whether it’s because they have limited credit history, dated information within their credit file, or are a part of a historically disadvantaged group. Without credit, it can be difficult for consumers to access the tools and services they need to achieve their financial goals. This February, Experian surveyed over 1,000 consumers across census demographics, including income, ethnicity, and age, to understand the perceptions, needs, and barriers underserved communities face along their credit journey. Our research found that: 75% of consumers with an average household income of less than $50,000 have less than $1,000 in savings. 1 in 5 consumers with an average household income of less than $35,000 say they’re confident in getting approved for credit. 80% of respondents who are not or slightly confident in getting approved for credit were women. When asked why they believed they would not get approved for credit, participants shared common responses, such as having poor payment history, a low credit score, and insufficient income. Given these findings, what can lenders provide to help underserved consumers strengthen their financial profiles and gain access to the credit they need and deserve? The power of credit education While only 20% of respondents were familiar with credit education tools, the majority expressed interest in these offerings. With Experian, lenders can develop and implement credit education programs, tools, and solutions to help consumers understand their credit and the impact certain choices can have on their credit scores. From interactive tools like Score Simulator and Score Planner to real-time alerts from Credit Monitoring, consumers can actively assess their financial health, take steps to improve their creditworthiness, and ultimately become better candidates for credit offers. In turn, consumers can feel more confident and empowered to achieve their financial goals. Credit education tools not only help consumers increase their credit literacy, confidence, and chances of approval, but they also create opportunities for lenders to build lasting customer relationships. Consumers recognize that healthy credit plays an important role in their financial lives, and by helping them navigate the credit landscape, lenders can increase engagement, build loyalty, and enhance their brand’s reputation as an organization that cares about their customers. Empowering consumers with credit education is also a way for lenders to unlock new revenue streams. By learning to borrow, save, and spend responsibly, consumers can improve their creditworthiness and be in a better position to accept extended credit offerings, driving more cross-sell and upsell opportunities for lenders. More ways experian can help Experian is deeply committed to helping marginalized and low-income communities access the financial resources they need. In addition to our credit education tools, here are a few of our other offerings: Our expanded data helps lenders make better lending decisions by providing greater visibility and transparency around a consumer’s inquiry and payment behaviors. With a holistic view of their current and prospective customers, lenders can more accurately identify creditworthy applicants, uncover new growth opportunities, and expand access to credit for underserved consumers. Experian GoTM is a free, first-of-its-kind program to help credit invisibles and those with limited credit histories begin building credit on their own terms. After authenticating their identities and obtaining an Experian credit report, users will receive ongoing education about how credit works and recommendations to further build their credit history. To learn more about building profitable customer relationships with credit education, check out our credit education solutions and watch our Three Ways to Uncover Financial Growth Opportunities that Benefit Underserved Communities webinar. Learn more Watch webinar
As more consumers apply for credit and increase their spending1, lenders and financial institutions have an opportunity to expand their portfolios and improve profitability. The challenge is ensuring they’re extending credit responsibly and inclusively. Millions of Americans, many of whom are creditworthy, lack access to mainstream credit options. This may be because they have limited or no credit history, negative information within their credit file, or are a part of a historically disadvantaged group. To say “yes” to consumers they otherwise couldn’t or wouldn’t lend to, lenders must gain a deeper understanding of an individual’s stability, ability and willingness to pay. That’s where expanded FCRA-regulated and trended data come in. While traditional credit data has long been the primary means of gauging creditworthiness, it doesn’t tell the full story of a consumer’s financial situation. Let’s explore how differentiated data can help lenders make more informed credit decisions. Using differentiated data for deeper lending Expanded FCRA-regulated data provides supplemental credit data to help lenders gain a more holistic view of their current and prospective customers. Some examples of expanded FCRA-regulated data include alternative financial services data from nontraditional lenders, consumer-permissioned account data, rental payments and full-file public records. Because this data drives greater visibility and transparency around inquiry and payment behaviors, lenders can more accurately determine a consumer’s ability to pay and distinguish between reliable and high-risk applicants. In turn, lenders can approve more creditworthy consumers, grow their portfolios and increase financial opportunities for underserved communities, all while preventing and mitigating risk. 89% of lenders agree that expanded FCRA-regulated data allows them to extend credit to more consumers. Trended data empowers lenders with predictive insights into consumers by providing key balance and payment data for the previous 24 months. This is important as lenders can determine if a consumer’s credit behavior has improved or deteriorated over time. In turn, lenders can: Identify creditworthy customers: Establish if a consumer has a demonstrated ability to pay, is consistently paying more than the minimum payment, or shows no signs of payment stress. Increase response rates: Match the right products with the right prospects. Determine upsell and cross-sell opportunities: Present relevant offers based on anticipated needs and behaviors. Limit loss exposure: Understand the direction and velocity of payment performance to effectively manage risk exposure. Trended data helps lenders better predict future behavior, manage portfolio risk and design the best marketing offers. Turning insights into action Together, trended and expanded FCRA-regulated data benefit lenders and consumers alike. With a more holistic view of their customers, lenders gain powerful insights to lend deeper, ultimately helping them to expand their portfolios and drive greater access to credit for underserved communities. Learn more 1 The Recovery of Credit Applications to Pre-Pandemic Levels, Consumer Financial Protection Bureau, 2021.
Credit scores play a major aspect in our lives. However, today's scoring system prevents many individuals from accessing credit. Learn more.
Experian recently launched Experian GO, a first-of-its-kind program aimed at helping credit invisibles take charge of their financial health. Read more!
Discover how you can leverage expanded data sources to make better decisions and empower consumers to more easily access financial opportunities.
We spoke with the Head of Data Analytics at Nova Credit and Experian experts to explore the topic of DEI and how to break down financial inclusion barriers.
Experian discussed the benefits of FCRA data and ways this data can ease credit access for “invisible” consumers in a recent webinar hosted by AFSA.
For credit unions, having the the proper income and employment verification tools in place is key when creating a first-class application process.
Experian announced its expansion into Employer Services and the release of its new real-time income and employment verification products, Experian Verify.
Download our report to learn why alternative credit data is supplemental and essential to consumer lending and how it’s being used by consumers and FI's.
In our most recent podcast, Experian experts discuss how to enhance your portfolio analysis after an economic downturn and drive greater access to credit.
Account management is a critical strategy during any type of economy (pro-cycle, counter-cycle, cycle neutral), but especially now.
To combat the threat of synthetic identity fraud, Experian recently announced the launch of Sure Profile a revolutionary change to the credit profile.
COVID-19 will affect the way financial institutions lend and provide credit. See what Shawn Rife, Experian’s Director of Product Scoring, had to say.