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Alternative data opens up doors to financial access for consumers – and Experian has been at the forefront of collecting, using and advocating for the use of alternative data for many years. This topic was explored and analyzed by the Consumer Financial Protection Bureau (CFPB) in a hearing today in Charleston, West Virginia. Experian is a big advocate for full-file reporting, which means that we support the widespread reporting of alternative data—including, rental payments, utility payments and cellular telephone payments to name a few. For a large segment of the population, the reporting of these types of payments could provide opportunities to establish and/or build a credit file. We believe consumer behavior has evolved and technology has advanced in a way that will soon enable Experian to facilitate lending to this population that we still call credit invisible. We are actively working to make these people visible, and to help them get access to responsible lending. For this reason, Experian supports enactment of the Credit Access and Inclusion Act (H.R. 435), which would allow consumers to benefit from the inclusion of alternative data into credit files. Consumers are at the heart of everything we do and this is why we chose to sponsor a two-year grant with the Credit Builders Alliance (CBA). This grant will enable us to work with affordable housing providers and public housing authorities to aid them in reporting rent payments to the credit bureaus in order to provide their low and moderate income residents with a valuable credit build opportunity. The project is ongoing and we are hopeful that this will help and empower many consumers and that this model of rental data reporting will continue to flourish in the future. Experian has conducted several studies looking at how the inclusion of alternative data could improve the lives of many Americans: After Experian began incorporating on-time rental payments to credit files through Experian RentBureau in 2011, we released an analysis in July 2014 that revealed the inclusion of on-time rental payments to credit files helps unbanked consumers integrate into the mainstream banking system. We also conducted a study on the impact of alternative reporting on-time utility payments in credit reports. Experian found that including these figures in credit reports would cause a 15 percent increase in those considered prime, which means those that pose little risk to lenders, as well as a 50 percent drop in the number of consumers considered to have a poor (sub-prime) credit history. In addition to these studies, other third parties have made similar findings. One study by the Policy and Economic Research Council (PERC) and the Brookings Institution, found that when energy and utility companies report both positive and negative data, those without a credit history dropped to 5 million. Experian has demonstrated that incorporating new data sources into credit files is a positive step for consumers because it moves them from being unscorable to scorable, and we believe CFPB’s continued attention on this important initiative could help millions of Americans finally obtain the loans and credit that were previously out of reach. By building a comprehensive picture of data points, this can immeasurably help underserved populations, including young adults, minorities and immigrants, access newfound opportunities. Credit bureaus like Experian can then use this data for good by building profiles of these consumers, many of whom would be able to then obtain credit for the first time. It ultimately unlocks greater potential for our economy.
Working in partnership with British charity, the National Literacy Trust, Experian has helped to analyze literacy levels across England. The study reveals that 86% of English parliamentary constituencies contain at least one area with serious literacy issues. By using our socio-demographic classification system, Mosaic, and harnessing The National Literacy Trust’s expertise, we have been able to create a literacy vulnerability score to measure the reading abilities of each region. The data illustrates the need to move away from nation-wide strategies to tackle literacy problems and move to more targeted local solutions. Although there are clear hot spots, the report found that literacy vulnerability is not restricted to regions with low income or social deprivation. The National Literacy Trust has shared the report with British Members of Parliament with an aim to help them better understand and respond to the specific literacy challenges in their constituency. Key highlights from the report: The constituency with the greatest literacy problems is Middlesbrough, closely followed by Barking in London Literacy issues are intensely localised Inner cities and their surrounding areas dominate the list of locations with a need for the greatest literacy support Continue to read more details from the report.
During the National Football League’s biggest weekend, it’s often the commercials that take center stage. It’s every advertiser’s dream. The world as your audience. But how do advertisers capitalize on the opportunity and connect with viewers? Advertisers are responsible for developing memorable content and messages that resonate with their audiences. This year, we saw our fair share of light-hearted commercials and those that tugged at our emotional heart strings. And most of them were discussed the next morning at the water cooler. So who did this year’s commercials resonate with? Based on 10 of the more talked about commercials during this year’s Super Bowl, we categorized them into two segments: emotional and light-hearted. We leveraged our Social Media Analysis to dig a bit deeper into the core demographics and social behaviors of the consumers who engaged with these brands. Interestingly, nearly three times the number of social media users engaged with brands associated with emotional commercials rather than the brands tied to more humorous TV spots. The emotional heart strings (Airbnb, Audi, Budweiser, Coke and Lumber 84) Our analysis revealed more than 52 percent of the consumers who interacted with these brands on social media were women, and nearly 28 percent fell between the ages of 26 and 35. Moreover, these consumers were 15 percent more likely to be single than the average social media user. They were also 1.91 times more likely to reside in Wahington D.C. The analysis also showed consumers who engaged with these brands were 2.69 times more likely to fall within the life stage Experian refers to as “Urban Edge” based on the company’s Mosaic® lifestyle segmentation system. People in this segment tend to be younger, up-and-coming singles, who live big city life styles near the top metropolitan markets. The types of social media handles these consumers were more likely to follow, included sports organizations, soccer teams and leagues, and magazine brands. Additionally, the hashtag these consumers were more likely to talk about than the average social media user was #travel, while they were more likely to mention @nytimes in social media posts. Commercials with a funny bone (Bai, Buick, Kia, Mr. Clean and T-Mobile) While there were some similarities in the core demographics of both segments of social media users, there were some slight variations. More than 54 percent of social media users who engaged with the brands tied to the light-hearted commercials were men. These consumers were also 26 percent more likely to be single than the average social media user, and 1.55 times more likely to reside in Washington (state). Consumers who engaged with these brands were 1.74 times more likely to fall within the life stage “Heritage Heights.” These are often single people and families with modest incomes who live settled lives in urban apartments. The types of social media handles these consumers were more likely to follow, included NFL and football enthusiasts, WWE, and technology influencers. Furthermore, the hashtag these consumers were more likely to talk about was #sweepstakes, while they were more likely to mention @shawnmendes than the average social media user. Quite frankly, each consumer is different. What peaks their interests and motivates them is unique to every individual. It’s up to marketers to understand who their customers are, and how to engage them in an impactful and meaningful way. And social media data provides them with a remarkable view into their preferences and opinions. Through our data and insights, we’re able to help marketers tap into who their customers are and how they behave. Marketers can take this information and optimize content for future marketing campaigns and deliver messages that resonate with their target audiences. The Big Game is only once a year, but marketers should “game plan” year round. It’s those marketers who will come out on top. To learn more about how marketers can leverage social media data, visit https://www.experian.com/marketing-services/targeting/marketing-measurement/social-media-analysis.html
Today, we stand at the forefront of a digital revolution that is reshaping the financial services industry. And, against this backdrop, financial institutions are at vastly different levels of maturity; the world’s biggest banks are managing large-scale infrastructure migrations and making significant investments in AI while regional banks and credit unions are putting plans in place for modernization strategies, and fintechs are purpose-built and cloud native. To explore this more, I recently had the privilege of attending the annual Reuters NEXT live event in New York City. The event gathers globally recognized leaders across business, finance, technology, and government to tackle some of today’s most pressing issues. On the World Stage, I joined Del Irani, a talented anchor and broadcast journalist, to discuss the future of lending and the pivotal role of data and AI in building a more inclusive financial system. Improving financial access Our discussion highlighted the lack of access to traditional financial systems, and the impact it has on nearly 100 million people in North America alone. Globally, the problem affects over one billion people. These people, who are credit invisible, unscoreable, or have subprime credit scores, are unable to secure everyday financial products that many of us take for granted. What many don’t realize is, this is not a fringe subset of the population. Most of us, myself included, know someone who has faced the challenges of financial exclusion. Everyday Americans, including young people who are just starting out, new immigrants and people from diverse communities, often lack access to mainstream financial products. We discussed how traditional lending has a limited view of a consumer. Like looking through a keyhole, the lender’s understanding of the person in view is often incomplete and obstructed. However, with expanded data, technology, and advanced analytics, there is an opportunity to better understand the whole person, and as a result have a more inclusive financial system. At Experian, we have a unique ability to connect the power of traditional credit with alternative data, bringing a more holistic understanding of consumers and their behaviors. We are dedicated to leveraging our rich history in data and our expertise in technology to create the future of credit and ultimately bring financial power to everyone. The future of lending After spending two days with over 700 industry leaders from around the world, one thing is abundantly clear: much like the early days of the internet, today, we are at the cutting-edge of a technical revolution. Reflecting on my time at Reuters NEXT, I am particularly excited by the collective commitment to drive innovative, and smarter ways of working. We are only beginning to scratch the surface of how data and technology can transform financial services, and Experian is positioned to play a significant role. As we look to the future, I am excited about the ways we will create new opportunities for businesses and consumers alike.
We believe that financial literacy leads to empowerment. That is why Experian supports initiatives and partners with community organizations to deliver financial education. We also develop products and services that give more control to consumers over their credit profile and financial health. As part of advancing our mission of Financial Power to All®, we are proud to announce we are helping more than 5,000 Hispanic individuals nationwide by relieving $10 million dollars of consumer debt. To provide families with this boost, we joined forces with ForgiveCo, a Public Benefit Corporation (PBC), to administer the acquisition and cancellation of qualifying consumer debt for the selected recipients. Beneficiaries will also receive a one-year premium Experian membership for free that offers access to their Experian credit report in English and Spanish[i], FICO® Score[ii], bilingual educational content, and other financial resources. We hope this effort helps raise awareness of the importance of financial literacy for everyone, and that Experian has resources to help individuals reach their financial dreams. To amplify the message, we collaborated with multi-platinum, award-winning singer and songwriter Prince Royce and you can see his video here. In fact, we have been making a concerted effort the last several years to evolve our educational resources and products to better support all underserved communities. Some of our other activities include the creation of the B.A.L.L. for Life initiative that connects African American and Hispanic youth with financial education, supporting scholarships for Asian Americans through the Ascend organization, providing custom resources for Out & Equal and Born This Way Foundation for the LGBTQ+ community, supporting the NextGen Innovation Lab for Disability:IN, and sponsoring credit counseling for the military community with Operation HOPE. For resources in Spanish, Experian offers a credit e-book and consumers can access a full suite of articles at the Ask Experian blog here. [i] Only Experian credit reports are available in Spanish. All other services associated with an Experian membership are available in English only. English fluency is required for full access to Experian’s products. [ii] Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.
Amid some of the financial challenges that underserved communities experience, members across the financial services community remain committed to championing initiatives and programs that drive greater financial inclusion. In fact, collaboration has led to the inclusion of non-debt related payment information on consumers’ credit profiles, as well as digital services that make it easier to manage money. These efforts have helped to broaden access to fair and affordable financial resources for more individuals. While significant progress has been made, there is still more work to do. However, some of the misconceptions and myths about the financial services community are hindering further advancement. Debunking these myths will accelerate progress by building trust between the financial services community and consumers. Person withdrawing money from ATM contactless Myth #1: “Financial institutions have no interest in underserved consumers or credit invisibles.” The truth is, banks and credit unions want to say “yes” to more prospective borrowers, including individuals and families from underserved communities. Beyond being the right thing to do, it’s an opportunity to potentially build lifelong relationships with a relatively untapped market. A show of good faith to communities who have largely been ignored by the financial system could lead to customer loyalty that may extend to their family and friends. That’s why participants across the financial ecosystem have been proponents of including expanded data sources—such as on-time telecom, utility and video streaming service payments—on to consumer credit reports, as well as exploring other Fair Credit Reporting Act (FCRA)-regulated data sources, including payment data on short-term small dollar loans and expanded public records data. Making this data more accessible to lenders provides a more comprehensive view of a consumer’s ability and willingness to repay outstanding debt—an actionable solution to extending credit to consumers without lenders taking on additional risk. Myth #2: “There is a lack of trustworthy financial education resources.” The financial services community and affiliated organizations recognize that empowering people with financial knowledge and skillset are critical to consumers’ financial success. In fact, banks and credit unions are partnering with nonprofits and non-governmental organizations to better understand the unique challenges and opportunities within specific communities and provide relevant tools and resources. For example, Experian’s B.A.L.L. for Life (Be A Legacy Leader) program, launched in partnership with the National Urban League, serves as a catalyst for engaging with Black communities and low-income youth through live events and digital financial education. Subject matter experts, professional athletes, celebrities, and other influencers share their experiences and expertise, covering topics such as banking, credit, financial management and investing. In addition, to help people improve their financial management, Experian partners with the National Foundation for Credit Counseling (NFCC). The NFCC connects consumers with certified financial counselors to help them address various pain points, including debt management, homeownership, student loans or small business cash flow issues. Myth #3: “Underserved communities have few opportunities to build credit and enter the mainstream financial system.” People from underserved communities, as well as younger consumers and recent immigrants are often excluded from the mainstream financial system because they lack an extensive credit history. Historically, it’s created a vicious cycle; in order to get credit, you have to have credit. Fortunately, there has been a sea change in innovative solutions to address the specific needs of these populations. These include new credit scoring models and microfinancing which provide financial services to individuals who may have been excluded from traditional banking systems. In addition, by incorporating expanded data sources, such as telecom, utility and residential rental payments onto credit reports, lenders have more visibility into consumers who may have been excluded by traditional credit scoring methods.These programs help individuals and families from underserved communities establish and build a credit history that could enable loans, or the ability to rent an apartment or open their dream business. An example is Experian Boost®, a free feature that allows Experian members to contribute their history of making utility, cellphone, insurance, residential rent and video streaming service payments directly into their Experian credit profile. By incorporating nontraditional credit data like paying utility bills on time, online banking transactions, rental payments and verified income data, more people can establish a credit profile that can potentially qualify them for a loan. More Inclusion, Fewer Myths It’s encouraging that community organizations and banks are beginning to see the economic and social benefits of aligning on financial literacy and inclusion. As more initiatives come online, underserved populations will be able to establish a better financial foundation. Then, we can declare the myths to be history.