More than half of U.S. consumers view their credit score at least monthly, with 87% receiving such updates at no cost. A recent study from Javelin Strategy & Research commissioned by TransUnion (NYSE: TRU) found that the majority of these consumers review their credit data through free services provided by their banks or credit unions, a practice that has ushered in an era of personal financial empowerment.
The positive impact viewing one’s credit score has on overall financial health is real. The Javelin study found that 71% of consumers who check their scores at least once a month perceive that they have control over their day-to-day finances, compared with the roughly 54% of consumers who never check their score.
“Credit reports and scores have evolved into one of the most accessible, powerful and popular ways for Americans to build an awareness and an understanding of their creditworthiness, gain financial confidence and protect their personal identities and financial assets,” said Austin Kilgore, Javelin’s Director, Digital Lending. “The U.S. model serves as a case study of how laws broadening access to credit information created greater consumer literacy and inclusion, strengthened the lending ecosystem and made credit markets more robust.”
In an effort to empower their customers to take more control of their credit, banks, credit unions and other organizations have been offering their customers access to white labeled versions of TransUnion’s CreditView Dashboard®. The dashboard is often used as an engagement, retention and marketing tool to provide customers with educational content and access to their personal credit information.
Proprietary TransUnion data confirms the assertion that checking one’s credit score can lead to more positive credit behavior. Nearly one in five consumers (19%) who enrolled and utilized the CreditView Dashboard at least once saw their scores improve 40+ points during 2018. This is compared with 13% of consumers of those same financial institutions that offer CreditView Dashboard, but do not take advantage of it.
Furthermore, more than one-third of subprime consumers (34%) who monitored their credit between March 2018 and March 2019 were able to increase their credit score to a near prime or above credit risk tier. This percentage dropped nearly in half to 18% for those consumers who did not monitor their credit in the same timeframe.
“Financial institutions offering information about their customers’ credit scores and other credit education services are providing invaluable information to them, empowering engaged consumers who are working on their financial resumes,” said Amy Thomann, head of consumer credit education at TransUnion. “Building a healthy financial resume affords many consumers the freedom and flexibility to access the opportunities they deserve.”
The Javelin study found that consumers who check their credit scores monthly express more confidence that they:
Additionally, the study determined that more than half of consumers using a credit monitoring service say they do so to remain vigilant and protect themselves against identity fraud.
Nearly half (48%) of consumers with prime credit scores check their credit data to see where they stand vs. 21% of consumers in the subprime population. That said, 19% of consumers with subprime scores access their data before applying for loans compared to just 7% for prime. Similarly, 16% of subprime consumers access this information to rebuild their credit versus just 6% for prime.
“Regardless of whether consumers are in the prime or subprime risk categories, it’s clear that they want to use these tools and take control of their financial future. Those consumers that use credit education tools will be the ones that are in the best position to reach whatever their goals may be,” said Thomann. “Ultimately, those institutions that offer services that enable a more trustworthy and mutually beneficial relationship with their customers will be in the best position to succeed.”
Additional details about the Javelin study will be featured in a Feb. 19 webinar sponsored by VantageScore LLC and titled, “How Access to Credit Scores Cultivates Better Borrowers and Safer Lending.” The webinar will be hosted by Javelin, with additional speakers from TransUnion and VantageScore.
Financial institutions and other company representatives interested in learning more about the provision of broad consumer access to credit scores, and how it can improve their customers’ credit health and prepare them for future opportunities, should register for the webinar here.