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Deeper consumer education drives increased financial responsibility and health
Two external forces led Experian to explore this pilot program. First, as our population digs out from recent economic setbacks, consumers have a heightened and genuine need to better understand their credit information and how it impacts their goals. Second, the new Risk-Based Pricing Rule now obligates lenders to deliver unprecedented levels of transparency and detail to applicants about their credit. So as lenders push out more data to a credit-stressed population, consumers increasingly ask, “What does this mean for me?”
With this backdrop, Experian launched a pilot program through its National Consumer Assistance Center (NCAC) to gauge consumers’ receptiveness to receiving credit education. Each year, the NCAC helps millions of consumers to request copies of their credit reports or to question/dispute information in a report that a consumer feels may be inaccurate. In the pilot program, the NCAC enabled consumers to schedule follow-up educational sessions, such as a walk-through of the major components of a credit report, the distinction and relationship between a credit history and a credit score, and definitions of negative elements on a credit history.
The sample population for the pilot program consisted of consumers funneled into the NCAC by some of Experian’s utility clients. These consumers often express the highest levels of frustration and urgency because they are investigating why they are required to pay a security deposit based on their credit history. Even with such a challenging sample population, the results of the pilot program (measured through exit surveys) were positive:
- On a scale of 1 to 5 (with 5 being the highest), respondents scored the service as a 4.9 in terms of being helpful
- Ninety-six percent of respondents indicated that they are likely or very likely to act on the knowledge they received and/or change how they use credit
- Nearly 50 percent of respondents ultimately felt positive or very positive about the utility company whose actions led to pulling a credit report and their being involved in the education session (despite still having to pay a deposit)
The benefits and possibilities of consumer credit education are far-reaching, and Experian views this type of pilot program and its results as just the beginning. Deeper consumer education drives increased financial responsibility and health — and a business that acts early to make this education available has the opportunity to drive a deeper affinity with its current or prospective customer base and ultimately build a healthy and differentiated consumer portfolio.
Experian will be launching Experian Credit EducatorSM in early 2011. Please click here to provide your feedback or to learn more.