Experian is to pilot a new service this summer to help people with little to no credit history built out their credit files, for free, in three months or less.
Information services company Experian has confirmed its intention to pilot a new service for credit invisibles that could help the financially excluded get better access to mainstream financial services.
The initiative aims specifically to serve the so-called ‘credit invisibles’ – people with little to no credit history – by helping them establish and develop their credit files.
The UK’s credit crisis
The company’s analysis of this demographic reveals the four to five million credit invisibles living in the UK today who find it difficult to access the mainstream financial services they require.
Although many stem from low-income households, the data also includes recent immigrants, ‘new-to-credit’ young people and the older generations who have paid off their mortgages or have not previously relied on credit within the scope of this demographic.
Whatever their standing, many credit invisibles face paying a ‘poverty premium’ to access financial services without the relevant credit behind them.
This premium incurs extra costs to access essential services, such as energy and financial services. Fair by Design calculates that the poverty premium affects 14 million households in the UK, costing parliamentary constituencies £4.5 million per year.
The deficit of relevant financial information can also present problems for people trying to access crucial public services, owing to difficulties verifying their age and identity with services using online know-your-customer (KYC) solutions.
Experian pilots new credit-building service
Selected providers will run the pilot, which will be available for free during the summer. Experian confirmed its intention to fully launch the service throughout its marketplace in the near future.
New-to-credit consumers will be able to confirm their identity and build their credit files through open banking-accessed transactional data.
Consumers will also be able to generate a score for the first time through the initiative’s partnerships with select credit providers.
“Our new service aims to help those who have been unable to access mainstream finance to build their credit file in a simple, straightforward way,” comments Yaro Zozulya, director of innovation at Experian UK and Ireland.
“The trial period will allow us to test the customer journey and validate the approach so that we can then launch to a wider audience,” continues Zozulya.
The announcement of the new pilot has been released as part of Credit Awareness Week 2023, which aims to encourage more people to engage with their credit history and personal finances.
This year’s event is especially important as people continue to be financially strained due to high inflation and the cost of living.
The pilot’s announcement aligns with Experian’s Social Innovation programme, which aims to build and recognise products that will have a positive impact on the financial health of consumers around the world.
Between 2013 and April 2021 Experian invested over $8million across 29 product ideas. Eighteen of those products have launched, reaching 61 million people, many of whom are from financially vulnerable backgrounds.