Credit Education Pays Off for Secured-Card Users & Issuers

September 25, 2019 by Jessica Woods

Secured credit cards are time-tested vehicles for enabling consumers with no or limited (thin-file) credit history to build their credit score profile. Pairing secured cardholders with individualized credit education services can help consumers and credit card issuers reach that goal.

While issuers know a greater opportunity awaits in transitioning secured-card holders to more lucrative products, such as traditional cards with higher borrowing limits, offering credit education solutions can help get consumers there faster. That’s because there’s more to financial wellness than just opening a credit card and making payments. There are many other factors that make up a credit score and giving consumers context as to what is powering their scores is key.

Credit Education Speeds the Process

Experian’s comprehensive credit education program, which provides personalized credit score snapshots based on the user’s credit report, can help consumers “graduate” to mainstream credit products. Credit education has proven benefits for consumer credit scores:

  • Experian internal studies found credit score improvements of 14 points or more on participants enrolled in credit education over a 12-month period, a jump which can push near-prime scores into the ‘prime’ category.
  • The Financial Industry Regulatory Authority (FINRA) reported that three years after Georgia, Idaho and Texas enacted financial-education mandates, all three states saw an increase in the credit scores of their participants and lower delinquency rates on credit accounts, with many qualifying for more affordable credit terms.[1]

Delivered seamlessly via a card issuer’s website or mobile app, Experian credit education services help users understand their credit and how their choices can help their scores improve over time by providing context on all of the factors that create the score, not just open accounts. Combined with tools for goal-setting, tracking progress toward those goals, and even previewing the credit-score impact of various decisions, Experian’s credit education services can help users improve their scores.

Enabling Relevant, Targeted Card Offers

The same Experian technology that enables consumers to improve their credit standing can help consumer finance companies prequalify users for traditional credit cards. Experian’s white-label or hosted credit education solutions provide a platform for issuers to send users prequalified offers. As users gain creditworthiness,  Experian credit education solutions can help lenders prequalify users for specific credit cards and deliver tailored, in-app offers for those products.

Combining secured credit cards with Experian’s personalized credit education solutions can help thin-file and credit-challenged customers improve their credit standing. Consumer-finance companies who monitor customers’ evolving creditworthiness via Experian’s RightOffer tools are perfectly positioned to issue those customers their first relevant, prequalified offers, for the right credit card that fits their unique needs.

Experian’s marketing experts can work with consumer-finance companies to generate appropriate in-app offers for prequalified card offers, and help support them with follow-up communications such as email and direct-mail solicitations.

To learn more about how your organization can complement a secured credit card program with credit education—and how Experian’s financial wellness solutions can increase customer engagement and satisfaction, download the Experian Partner Solutions Consumer Finance eBook.

[1] https://www.finra.org/sites/default/files/investoreducationfoundation.pdf