Credit Monitoring Improves Digital Banking Engagement & Saves Members Money
Your members want to improve their financial wellbeing and save money. Your financial institution wants to create sticky digital relationships.
Here’s something that can help you both: Credit monitoring.
How does credit monitoring help members?
Having a safe and easy way to keep an eye on their credit enhances consumer financial wellbeing in a variety of ways:
Makes it easier to find and stop fraud. According to the Federal Trade Commission, American consumers lost more than $5.8 billion to fraud in 2021, which was a 70% increase over 2020. When your members have a safe, convenient way to monitor their credit, they’re more likely to uncover—and recover from— fraud more quickly.
Helps uncover and correct credit report mistakes. Credit report errors are much more common than many people realize. According to a 2021 Consumer Report investigation, more than a third of consumers who participated in a voluntary credit report check found errors. And these errors are more than a nuisance. Negative impacts can include being unfairly charged higher interest rates on a loan or credit card and being turned down for a job or a place to live.
Can improve credit scores—and consumer financial wellbeing. Based on internal research SavvyMoney has conducted with partner financial institutions, we’ve found that consumers who monitor their credit data see strong improvements in their credit scores. Across all score ranges (except the 750-850 range), there was a 30% improvement in six months and a 39% improvement in 12 months. In the 300-649 score range, the improvements were even more dramatic: 32% in six months and 41% in 12 months.
Score improvement can mean significant savings for your members. Most importantly, members who improve their score can see a stark difference in interest costs on their loans. According to a study from LendingTree*, borrowers in the “fair” credit range (scores between 580 and 669), could end up paying over twice as much interest on personal, auto, and student loans, and 97% more on their credit cards.
Because credit monitoring is a soft pull, your members can check their credit data as often as they want without any impact to their credit score. That can help them get a better handle on their current financial health and areas where they could improve. Add in personalized education and loan offers based on their score, and you’ll help create a virtuous cycle of better credit, better lending rates and improved overall financial wellbeing.
Most consumers don’t currently monitor their credit.
But that might change if they could monitor it through you.
Unfortunately, having four good reasons to monitor their credit doesn’t mean most people do. According to an annual customer survey from LendingTree*, only a third of American consumers take that step. A big reason why: Consumers are reluctant to provide their personal information.
This aligns with a key finding from SavvyMoney’s financial institution partners: 75% of users want to be able to check their credit score from inside their trusted financial institution. Consumers are understandably reluctant to share personal information. If their credit data is available through your financial institution’s online or digital banking—i.e., just a single sign-on away—they won’t have to.
Use a credit monitoring service that updates credit files more frequently—the best have the option of daily updates—and you’ll allow your customers to track if they’ve moved into a new range and be alerted when their most up-to-date score qualifies them for lower rates.
Giving members access to credit monitoring helps your financial institution too.
Choose a company whose solution integrates with your digital banking platform. That allows your members to safely and easily monitor their credit score right from your online or mobile banking and drives more engagement with your website or app. As the chart below captures, that additional engagement can drive an uptick in a wide variety of products and services, including checking penetration, which is often seen as a proxy for PFI status.
Source: SavvyMoney partner case study
Credit monitoring. It’s good for your members. Good for your credit union. If your credit union isn’t currently making it easy for members to check their credit with you, it’s a service worth investigating.
*Source: Kali McFadden, LendingTree “Raising a ‘Fair’ Credit Score to ‘Very Good’ Could Save Over $56,000” – January 7, 2020