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Research Shows: It’s Time to Find a New Way of Doing Things

January 18, 2022 by Greg Wright

Business women working with research late, working from home

In the early 1960s, Simon Ramo had a vision of a cashless society made possible by information and technology. This vision led to the creation of our business in North America. Ramo believed information could change the way people lived. Today, we know this to be true and continually see the ways data and technology can create enormous good in the lives of millions of consumers.

While much has changed since the 1960s, Ramo’s vision holds true and continues to fuel the way we work at Experian. These principles have put consumers at the center of our business, which has forced us to think outside the box and do things differently.

Let me give you an example.

Until 2019, consumers had never been able to contribute information directly to their credit report. When we launched Experian Boost, we fundamentally changed the game. We put consumers in the driver’s seat and empowered them to contribute their on-time bill payments directly to their Experian credit report. By doing so, we’ve helped millions of consumers instantly improve their FICO® Score. This was a game changing move that is making a tangible difference for consumers. In fact, Experian Boost users have accessed more than $1.7 billion in credit due to improved credit scores.

While we are proud of what we continue to accomplish with Experian Boost, we know financial inclusion depends on all of us doing more. On all of us doing things differently.

We recently released new research in partnership with Oliver Wyman which shows 106 million Americans, or 42% of the adult population, lack access to mainstream credit because they are credit invisible, unscoreable or have a subprime credit score. Communities of color are more likely to lack access to mainstream credit, with 28% of Black and 26% of Hispanic consumers unscoreable or invisible, which is perpetuating historic disadvantage.

While we have made a lot of progress in recent years by incorporating new data in decisions, as an industry, we can and must do better to ensure all consumers have access to fair and affordable credit. The old way of doing things, the old tools, will not work to ensure more consumers can access the financial services they need when they need them. The score models historically used by lenders are leaving nearly 50 million Americans behind.

We need better data and better technology to help more consumers.

When advanced analytics and machine learning are combined with expanded data sets as they are with Experian’s Lift Premium™ score, 96% of the population can be scored, including an estimated 65% credit invisibles and the entire conventionally unscoreable population. This is significantly greater than the 81% of consumers that can be scored by conventional scores today.

Scoring 100% of Americans and expanding fair access to credit to creditworthy consumers is our goal. This is an exciting time as we are nearing a point where we can say, no matter who you are, where you live or what part of your financial journey you’re on, we can score you and help you access the financial services you need.

We can’t do it on our own. Financial inclusion depends on industry adoption of these new tools and insights.

As we begin a new year, I believe the financial services industry is at an inflection point. And I am hopeful. I think we can all agree it’s time for a new way of doing things and today we have the tools available to make it happen.

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