Credit union roots are anchored in the philosophy and action of helping members improve their financial well-being, and they accomplish this in a number of ways. One of the most important has been and continues to be credit-building activities to help members deepen and improve their credit profiles. These credit-building activities include offering small-balance or share-secured loans with clear goals to improve a member’s credit score. Many credit unions take this step to the next level by requesting and manually reviewing alternative credit sources such as phone, rent and utility payments to factor into the equation. It’s a clunky and labor-intensive process, but it illustrates how far many of us will go to help credit-challenged consumers and those with thin credit files. Combined financial education, credit building and improved savings develop members, and ultimately this improves the quality of life for members.
A new tool to develop member credit scores
Experian recently announced a new product, Experian Boost. This industry-first online platform will help millions of consumers have the opportunity to instantly improve their credit scores by adding positive telecom and utility payment information directly into their credit profile. Experian Boost is free.
“Globally, we are constantly innovating and leveraging technology to find new ways to help consumers gain access to quality credit, while promoting fair and responsible lending,” said Experian Global CEO Brian Cassin. “We are committed to financial inclusion, and Experian Boost is the latest example of our efforts to increase consumer awareness of credit’s impact and value while giving them greater control.”
We’re grateful to have collaborated with Experian for many years now. Experian’s latest announcement reinforces what we’ve known for a long time – its commitment to inclusion and support for underserved markets. It’s committed to helping consumers and businesses in their financial journey.
How credit unions can utilize Experian Boost
Boosting one’s credit score with the addition of timely alternative data is valuable to many credit union members (and potential members).
- Low-income and credit-challenged consumers – nearly half of all U.S. credit unions are Low Income Designated. This means that more than half of their members live in low-income census tracks. Many, if not most, of these consumers live paycheck-to-paycheck and are credit-challenged. A boost from alternative-data sources may help these lower-score members improve their scores and qualify for credit – at their credit unions.
- Thin-file consumers – at a time when credit unions are assertively trying to lend to Gen Y and Z consumers, Experian Boost may help credit unions thicken thin files for younger people, and help them qualify for credit – at their credit unions.
Why it matters
Consumer lending drives our business models. We exist to lend to members. I hope credit unions will embrace this new free tool, incorporating it into their member development and onboarding process. An estimated 41 percent of adults have thin or no traditional credit trade lines. This tool, especially when it accompanies credit education, could help countless more consumers improve their credit scores and qualify for credit.
I hope credit union leaders and lenders will take a moment to learn more about Experian Boost and consider how this tool can help members boost their credit profile, increase organic loan growth, and deepen member relationships.