Roughly 6% of households and 14.1 million American adults are currently unbanked,1 18.7% are underbanked,1 and nearly 1 in 3 consumers presently has a subprime credit score.2 At the same time, a whopping 40% of US adults say that they’d also struggle to come up with the spare funds required to pay for an unexpected $400 bill.3 Almost 60% of adults can’t complete the simplest interest rate and inflation calculations and 38% can’t calculate the compound interest of debt.

It’s data points like these that plainly illustrate the pressing need to provide credit education for the unbanked, underbanked and credit invisibles (those with no formal reported credit history). Happily, as a growing number of financial leaders are fast becoming aware, this presents an opportunity to inform and empower these customers and provide them with better pathways to financial health and independence.

The reasons behind the current educational divide are many. For one, basic financial literacy isn’t taught in school and apparently isn’t recognized as one of the core skills needed to succeed in the 21st century. Secondly, credit can be somewhat complex and hard to grasp. As a result, most people are walking around with perceptions that are simply untrue. Such as the notion that checking your own credit report lowers your score. Or that income is factored into your credit score. Or that only rich people have high credit scores, and so on. In addition, many of these people do not trust banks or other financial providers, worry about their data privacy, and are leery of the high fees they perceive to be associated with their products.

Keeping this in mind, financial providers of all kinds (including both traditional and fintech providers) have a big window of opportunity to aid American households and expand their customer audience by providing added education, instruction, and thought leadership surrounding money management. As many banks, credit unions, fintech companies and others are rapidly learning, there’s tremendous value to be recognized in helping unbanked and credit invisibles gain a more complete picture of their financial health and how to improve it over time.

Noting that 4 in 10 Americans have no idea how their credit score is determined and that more than half feel like those with bad credit are treated like second-class citizens, it’s time for a change.5,6

With Experian Partner Solutions, companies can help bridge this knowledge gap by providing credible, detailed educational resources so that customers can more fully understand their credit health. Helping your customers navigate the often-confusing credit landscape not only meets this growing demand, but also drives customer acquisition, retention and engagement. With Experian as a partner, you can help differentiate your business and enhance your brand’s reputation as a company that cares about their customers and provides maximum value.
Experian’s Credit Education

  • Instills good habits so your customers can achieve their financial goals
  • Helps them see exactly what they need to do to help improve their credit
  • Assists in setting goals and allows them to track their progress over time
  • Can help them uplevel their credit score so they can qualify for more affordable loans, lower security deposits, cheaper car insurance, credit cards with rewards programs and more

Customers will learn how to read their credit report, how credit scores are calculated, how to up-a level their scores and much more. In the end, they won’t just have a better sense of what it takes to build a winning credit history. They’ll also have taken their first steps on the path to building positive financial habits – and have begun formulating a plan for the next moves in their financial journey to fiscal independence.

Find out more about Experian Partner Solutions Credit Education offering by visiting experianpartnersolutions.com/credit-data/.

 

[1] Roughly 6% of households and 14.1 million American adults are currently unbanked: https://time.com/nextadvisor/banking/what-to-know-if-you-are-unbanked/

[2] Nearly 1 in 3 consumers has a subprime credit score: https://www.experian.com/blogs/ask-experian/research/subprime-study/

[3] 40% of US adults say that they’d also struggle to come up with the spare funds required to pay for an unexpected $400 bill: https://www.cnbc.com/2019/07/20/heres-why-so-many-americans-cant-handle-a-400-unexpected-expense.html
[4] Almost 60% of adults can’t complete the simplest interest rate and inflation calculations: https://www.kiplinger.com/article/retirement/t047-c032-s014-most-think-they-know-more-about-money-than-they-do.html

[5] 4 in 10 Americans have no idea how their credit score is determined and more than half feel like those with bad credit are treated like second-class citizens, https://www.cnbc.com/2019/01/04/about-4-in-10-americans-have-no-idea-how-credit-scores-are-determined.html

[6]  More than half of Americans agree that people with bad credit are treated like second-class citizens: https://www.nbcnews.com/business/consumer/many-americans-are-still-totally-confused-about-credit-scores-n764121