Experian conducts analysis with Credit Builders Alliance and confirms value of credit building to the financially vulnerable
“Credit invisibles” among those helped by Credit Builders Alliance to build strong credit and financial access in order to grow their business and personal assets
Costa Mesa, Calif., September 16, 2014 — Experian®, the leading global information services company, today announced the results of an analysis confirming that building a credit history is beneficial to financially marginalized communities. In partnership with Credit Builders Alliance (CBA), Experian sought to understand the potential impact of loan repayments being reported to them by CBA members (nonprofit lenders). The average client served by a CBA member is high-risk, with about 40 percent being classified as subprime. The study’s overarching conclusion showed that consumers who opened a credit product offered by a CBA member and paid as agreed, experienced a significant shift into a more desirable credit risk segment, raising their credit score and qualifying for additional credit.
Experian research estimates that there are 64 million consumers with limited credit history to no credit history that are unscoreable or “credit invisibles.” Lacking a credit report hurts these consumers’ opportunities for gaining employment and qualifying for loans, often resulting in higher deposits for services such as cell phones and utilities. Quite simply, credit invisibility means fewer economic opportunities for these consumers, when, in fact, low- and moderate-income families need more financial options.
“This first-ever national study of CBA’s membership has confirmed exactly what our experience has shown to be true — when people pay regularly on their credit obligations and these payments are reported to a credit bureau, those individuals will benefit through building stronger credit reports and scores,” said Dara Duguay, executive director, Credit Builders Alliance. “Ultimately, a better credit score will help individuals gain increased access to safe and affordable mainstream financial products and build assets.”
Some of the key findings from the analysis (studying CBA portfolios from June 2012 to June 2014) include:
•Fifty-eight percent of the borrowers experienced increases to their VantageScore® credit scores
•The prime population increased by 5 percent
•More than 20 percent moved to a lower risk category, i.e., from subprime to nonprime
•More than 73 percent of consumers increased their active, open trades
These indicators confirm the relationship between building credit and increasing credit scores, lowering one’s risk category and qualifying for additional sources of credit. Consumers benefit since an overall more positive credit report can tend to result in lower costs of credit. As an example, a consumer can save roughly $4,000 over a $10,000 five-year auto loan if his or her payments are at 3 percent interest as opposed to 17 percent.
“Financial inclusion and empowering consumers to build and understand credit is a top priority for Experian,” said Genevieve Juillard, president of Experian Consumer Information Services. “However, many consumers do not conduct financial transactions with companies that regularly report data to the national credit reporting agencies. Credit Builders Alliance has forged the way for small nonprofit lenders to take the crucial step of reporting data to Experian and the results of this study demonstrate the benefits to consumers, including improved credit reports and credit scores.”
Additional Experian consumer education resources
Experian has been committed to improving consumer financial literacy for more than 20 years and is dedicated to providing products and services that help consumers manage their credit reports and credit scores better, so they can get the credit they need when they need it.
Consumers can connect with Experian and learn more about credit in other ways, including by:
•Joining the #CreditChat, hosted by @Experian_US on Twitter with financial experts and consumers every Wednesday at 3 p.m. Eastern time
•Reading about Experian’s perspective on trends and news at the Experian News Blog
•Visiting Experian’s help site for answers to common questions, advice and education about consumer credit
•Asking credit questions on Experian’s Facebook page at https://facebook.com/experianus
Experian Public Relations
1 714 830 5192
Credit Builders Alliance executive director
1 202 888 7588
About Credit Builders Alliance
Credit Builders Alliance was created by and for our nonprofit members to help non-profit lenders report loan repayment data to the major credit bureaus. CBA serves as a unique and vital bridge between our members and the major credit reporting agencies (CRAs). Our philosophy is that good credit is essential to achieving and maintaining financial stability, and that mission driven nonprofits are uniquely positioned to help struggling households build credit as an asset. Our core services, CBA Reporter and CBA Access, provide nonprofits with both the ability and critical technical assistance to report loan data to the CRAs and to pull low-cost client credit reports for the purposes of financial education, outcome tracking, and underwriting.
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2014, was US$4.8 billion. Experian employs approximately 16,000 people in 39 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil. For more information, visit http://www.experianplc.com.
Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.
VantageScore® is a registered trademark of VantageScore Solutions, LLC.