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We sit in a pivotal position in the societies where we work. For us at Experian, using our data and expertise to create a better tomorrow is more than an opportunity. It’s a responsibility. We are pleased to announce we have published our annual Sustainable Business Report 2020, which outlines Experian’s dedication to social and environmental issues and details our corporate responsibility performance. In the report, we also highlight Experian’s target to reach 100 million additional people globally by 2025 with social innovation products and services. Additionally, the Sustainable Business Report focuses on our ambition to become carbon neutral by 2030. By utilizing renewable energy, reducing the carbon impact of business travel, and investing in high-quality carbon offsets, we reduced our carbon footprint by 8% last year and cut the carbon intensity of our business by 14% per $1,000 of revenue compared with the previous year. Additionally, 29% of Experian’s worldwide energy was also renewable. We are excited to share a few key takeaways from this year’s Sustainable Business Report: Experian employees volunteered 54,500 hours in and outside of work time to support their communities. This included over 3,500 hours in March 2020 to support communities as the COVID-19 crisis took hold. In Brazil, we have supported the introduction of new legislation enabling millions of consumers to benefit from the use of ‘positive’ data about the credit and other bills they pay on time. Experian Boost helped over 1.5 million Americans improve their credit scores, collectively boosting their FICO® scores by more than 17 million points. Prove ID-Link helped 7.5 million people in India prove their identity. As a result, more people are able to open a bank account and access credit for the first time. Learn more by viewing or downloading our full Sustainable Business Report here.
“What does a credit bureau do?” is one of the most common questions I’ve answered throughout the years – both at conferences and cookouts. Admittedly, it can be difficult understanding the different roles of credit bureaus, credit score companies, and lenders. Amid COVID-19, it’s important for us to define our purpose and help guide you toward the right resources for financial help. As the consumers’ bureau, Experian is committed to examining financial questions and helping consumers, businesses, and lenders navigate this transitional fiscal landscape. It’s important for you to know your financial options and how to separate fact from fiction, especially during times of crisis. Here are answers to some of the most common questions about credit. Do credit bureaus make lending decisions? This is one of the rare instances in credit reporting for which there is a simple answer. No, credit bureaus do not make lending decisions. Lenders – such as banks, mortgage companies, credit unions, and credit card issuers – help consumers borrow money and they make the lending decisions. The credit bureaus are responsible for working closely with lenders to provide information that helps them make informed and responsible lending decisions. At Experian, we equip lenders with accurate and complete data about consumers’ and small businesses’ credit activity and payment history, which enables lenders to develop a full picture of a borrower’s financial health. During COVID-19, it is important for there to be open lines of communication between consumers and lenders about upcoming payments and payment plans. Some lenders are offering deferments and other workable accommodations to ensure consumers do not fall behind on their payments. It is important for consumers to contact their lenders to understand what options are available to them. Do credit bureaus control my credit score (and whether it goes up or down)? Credit bureaus, like Experian, do not determine your credit score. Credit scores are calculated based on third-party credit-scoring models, like those developed by FICO or VantageScore Solutions. These models use information from your credit reports, including credit activity sourced from credit bureaus, to calculate a credit score. The scoring models are proprietary to the companies that develop them. In the most fundamental terms, the credit bureaus are responsible for compiling the credit reports. The scoring companies create algorithms that calculate the score. Credit scores reflect the information in your credit report at the moment the credit score is calculated. The scores will change to reflect changes in your credit report. You control how you use credit, so you play an important role in determining whether your scores trend upward or slip downward. If you consistently make good credit decisions, your scores will trend upward over time. Reviewing your credit report helps you manage your credit and gives you a full picture of what lenders see. Monitoring your credit report is as important as reviewing bills and bank statements, as your credit is an integral part of your overall financial health. Additionally, with an increase in phishing and cyberscams as a result of COVID-19, it’s especially important to stay informed about your credit report, so that you can dispute anything you believe may be inaccurate and ensure that there is no evidence of fraud that could impact your score. Are lending decisions based solely on my credit score? No, credit scores are just one factor in lenders’ decision-making process. Lenders consider additional information when making a decision, such as employment status, income and information about a consumer’s assets and liabilities. In the wake of COVID-19, lenders may start to tighten their credit standards – meaning consumers may need a higher score to receive a loan. Because of this, it is important to be proactive and take action to mitigate any potential negative impact on your credit score. If you’re worried you may miss a payment, contact your lender to discuss your options. Through April 2021, Experian has partnered with our peer credit bureaus to offer a weekly free credit score at https://www.annualcreditreport.com/. This additional measure will allow consumers to access their credit reports frequently and talk to their lenders with the most updated information possible. How are credit bureaus working with the government during COVID-19? At Experian, we fully supported the signing of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides relief to Americans through expanded unemployment coverage and by providing grants and loans to small businesses. The CARES Act also provided important guidance to lenders about how to work with consumers affected by COVID-19. Experian is working with lenders to ensure appropriate accommodations are made to protect consumers. Additionally, the credit reporting industry has developed reporting standards for lenders to use during emergency periods, such as COVID-19. These reporting standards allow lenders flexibility when reporting accommodations made to consumers who are experiencing hardships due to the pandemic. For additional questions regarding COVID-19 debt and credit relief options, view Experian’s full list of financial and non-financial institutions’ websites where you can find information on relief measures: COVID-19 (Coronavirus) Credit Card and Debt Relief.
We are delighted to have completed the acquisition of a 60% stake in Arvato Financial Solutions Risk Management Division (AFS RM), expanding our presence in Germany, Austria, and Switzerland (DACH) and bringing Germany’s second largest credit bureau into Experian. It is an incredibly exciting moment for us both and marks a significant step forward in Experian EMEA’s growth ambitions. Together, we form a powerful new partnership in Europe’s economic powerhouse. With AFS RM’s local expertise and sector knowledge of industries like e-commerce, telecoms and insurance, and our global experience and innovation in data, analytics, software, and technology platforms, we will redefine what’s possible for our customers. AFS RM brings market presence with high-quality risk, fraud and identity management products and solutions tailored for key industries. We bring scale, expertise, and innovative products like Experian One and Ascend Analytics on Demand. Together, we will offer the best new technologies into these markets, delivering broad coverage and innovation that enables existing and new customers to make better, faster decisions, ultimately delivering greater access to finance for people across the region. Our new partnership will be branded Experian, which is just one of the ways we’re welcoming AFS RM to the Experian family. I’m delighted it will be led by Kai Kalchthaler as CEO, Experian DACH, who will ensure we help businesses find and fulfill their potential, so they can go further with us. Watch how we’re redefining possible, today, tomorrow, together here.
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.