Consumers don’t always understand the context of their credit scores and it’s not always obvious what is needed to improve their creditworthiness. The truth is there’s a lot more to a what makes up a credit score than just a number, and the stakes can be high for everyday people. Higher scores can save money and help consumers get approved for lower interest rates, reducing fees on everything from credit cards to home loans.
This is particularly important for millennials, the largest generation with the most spending power in the US. This demographic is also entering the workforce with the highest level of debt in the nation’s history1. As older millennials are starting families and taking out mortgages and car loans, they’re discovering that being smart about using credit pays.
Let’s take Melissa for example, she’s single and just seven years out of college. Melissa is at a point in her life where she needs credit to finance big purchases. She is moving to a larger apartment and needs a reliable car to commute. Unfortunately, she didn’t keep an eye on her credit scores and ran up debt right after college. Now she’s unable to qualify for the best rates on new loans. Managing credit wasn’t something that came naturally to her, and it wasn’t something taught in school.
For consumers like Melissa, knowing her scores is a great start, but it isn’t enough. They need interactive tools to show what affects the numbers: what the scores say about their financial health, their ability to access credit and what they can do to improve them.
With today’s consumers facing the most complex credit landscape ever, there’s an excellent opportunity for fintechs to provide their customers with interactive credit education tools that offer personalized insights. Consumers are motivated and are seeking guidance. According to the National Foundation for Credit Counseling, four in five adults in the US want professional advice on basic financial issues, like how to tackle credit card debt or improve their credit scores.
Getting the Bigger Picture
With Experian’s credit education tools, your customers can monitor their financial health, plan ahead, and take steps to improve their creditworthiness.
- Set goals: Credit Score Planner helps consumers to be proactive and set goals to reach their target credit score.
- Test different strategies: With Credit Score Simulator, your customers can see how different actions like increasing card limits or paying off a loan may improve their credit scores.
- Track progress: Credit Snapshot provides a summarized snapshot of a customer’s credit report and how it has changed over time. They can see how life events like large purchases or holiday spending affect their scores so they can plan for their financial future.
The interactive credit education tools are available via web or mobile app and use visual models to display personalized data and potential scenarios, making complex financial concepts easy to grasp. Research shows that using visual cues in learning can simplify complex concepts and speed information processing, which boosts recall and comprehension2.
As for Melissa, she was able to create a plan to improve her scores. She even used the Credit Score Simulator to find out whether making extra payments on her student loan or paying down a high-interest rate credit card would have a larger impact on her scores.
In the Black
For lenders, giving customers more visibility into their credit scores with credit education builds engagement and loyalty, while directly benefiting the bottom line. Keeping customers borrowing and spending responsibly are proven ways to boost credit scores. The result is a growing pool of creditworthy customers with the increased likelihood of approval for extended credit offerings.
Ask About Our Credit Education Products
Experian offers flexible turnkey products that are available via an easy-to-use white-label platform or a hosted solution, giving Fintechs the ability to offer a comprehensive set of branded educational tools that help their customers manage credit wisely. Curious? Download our complimentary eBook, How Credit Education Can Help Fintechs Grow.
1 Pew Research Center, 5 facts about U.S. student loans, 2017
2 eLearning Industry.com, Visual Learning: 6 Reasons Why Visuals Are The Most Powerful Aspect of eLearning