Engage Now, Benefit Later: Helping Consumers Manage Their Credit Health is a Key Element of Support Response

The demand for credit information has increased as consumers seek to manage their credit health during these difficult times. Financial institutions that empower consumers to access, understand and apply this information will likely be well-positioned for rapid recovery in the “new normal.” In this blog, Roman Mykhaylyshyn, Head of Consumer Solutions, Canada, explores the dynamics of credit monitoring and consumer engagement, their impact on credit behaviour, and subsequent implications for lenders’ growth strategies through the crisis and beyond.

Managing expectations and finding opportunities

Market uncertainty, such as we’re experiencing now, creates new expectations as well as new opportunities for financial institutions.

In terms of expectations, it’s a sound — and likely, necessary — industry practice to support the most vulnerable customers and address immediate risks. Our Consumer Financial Hardship studies, which track the perceived impact of the COVID-19 crisis on Canadian consumers, show that over 50% of consumers say their household income has been impacted by reductions in work hours, the closing of small businesses or loss of jobs.¹

However, lenders also need a prudent growth strategy focused on finding opportunities and putting measures in place to prepare for the rebound.

Helping consumers engage with their credit information during turbulent times is one such measure. Access to credit information can have a positive impact on consumers’ behaviour, financial decisions and credit health.

In the consumer first era, people are more aware of their information and want to be able to access it on demand. At TransUnion, we’ve witnessed a trend: A growing number of consumers monitoring their credit information more often. And with digital adoption now in full effect, consumers expect personalized, relevant experiences on mobile or online platforms.

Organizations that respond to this demand for information with appropriate tools and resources will be able to improve consumer engagement and set themselves up for growth.

Credit monitoring is on the rise — and that’s good news

Our data shows over 5 million active consumers in Canada are using TransUnion credit monitoring services. Around 5.6 million used a TransUnion credit monitoring solution in the last 12 months, while upwards of 2.3 million monitored their credit in March 2020 — a figure that’s been growing steadily since 2017.²

Breaking this down further, we see that:

• Around 30% of consumers monitor their credit score at least once a month.
• Among younger cohorts, that figure is even higher (49% of Gen Z and 39% of Millennials), possibly due to higher adoption of digital banking.
• Most self-monitoring users exhibit high engagement with their credit information over time, particularly within 13 to 24 months of first using the monitoring service. This shows monitoring isn’t a one-time phenomenon, and users continue to find value over time.
• Most log in multiple times during the first 12 months after sign-up. These highly tenured users are skewed toward lower-risk tiers, most likely as they’re attempting to improve their credit standing to qualify for financial products and better interest rates.

But what makes this good news for lenders? The answer is consumer credit engagement also has a positive impact on credit health. It creates more informed consumers with higher propensities to seek new credit

Our research into consumers that use a TransUnion monitoring services reveals that:

• Almost 35% of subscribers improved their credit score by at least 30 points, and over 27% moved to a near or above-prime risk tier within 12 months of starting to monitor their credit.
• Credit-monitoring users appear to be over three times more likely to open new credit accounts and grow balances, and five times faster in growing spend, particularly in the first years of the relationship.

An effective customer support response strategy should therefore incorporate tools and capabilities for educating and engaging customers, and equipping them to make smarter decisions about their credit and financial health.

Three ways to incorporate engagement in your growth strategy

1. Enable easy access to credit data: Give consumers the 24/7, on-demand access to information they expect, on their channel of choice — over 50% of consumers prefer mobile.
2. Provide useful information and insight: Awareness of or access to their credit score is not enough to help consumers improve their credit health. Explain what can affect credit scores, what it can mean for access to credit, and potential steps that could help improve the score. Access to credit information also provides visibility of existing credit facilities, so consumers can take action to address issues or inaccuracies that could be impeding their credit standing.
3. Support informed decision-making: Help consumers evaluate financial trade-offs by seeing how a score may be affected by the decision to add a new credit card, increase credit limits or pay down debt faster. Credit alerts identify key changes to consumer credit files in a timely fashion and can help detect potentially fraudulent activities.

Most importantly, use every touchpoint as an opportunity to drive further engagement with your customers. Remember, businesses that engage now will be in a strong position to benefit later.

Additional resources:

Consumer research

To learn more about our ongoing consumer research, or download the latest reports and infographics, visit transunion.ca/financial-hardship-study.

Credit monitoring

At TransUnion, helping consumers manage their credit health has always been an integral part of our mission. We believe that educating and empowering consumers leads to real economic opportunity for them and businesses alike.

TransUnion’s CreditView® is a digital platform that allows your organization to provide branded, on-demand access to credit information through intuitive dashboards and interactive simulations. Use it to:

• Educate: Attract consumers who want to learn about their credit by giving them access to their TransUnion credit profile, along with educational tools to better understand what it’s comprised of
• Engage: Enable “the sticky factor” —  once users try CreditView and see how easy and valuable it is, they’ll likely keep coming back, which enables you to build loyalty while gaining insight into their financial needs
• Predict: Interactions with score simulator and behavioural insights inform what products and services consumers want — so the most relevant and targeted offers could be presented in near real-time

Visit transunion.ca/product/creditview to find out more.