More than 100 million U.S. consumers enrolled in a service to
monitor their credit data from TransUnion (NYSE: TRU) between the
start of 2018 and September 2023. A new TransUnion global study
found that the motivations of consumers monitoring their credit
differ, with the majority of Americans doing so with a near-term
goal of opening a new credit account (55%). Three in 10 U.S.
consumers (30%) monitor their credit to better manage their debt
levels, while 15% seek to improve their credit scores.
To better understand the distinct profiles, motivations and
future outcomes of credit monitoring consumers, TransUnion
conducted a global research study examining credit behaviors for
millions of consumers in both developed and developing markets,
including the United States, Brazil, Canada, Chile, Colombia,
Dominican Republic, Guatemala, Hong Kong, India, Philippines, South
Africa and United Kingdom.
To further identify how these benefits advance credit education
and enable financial inclusion, the study used depersonalized
credit data to analyze these outcomes for key consumer credit
segments: new-to-credit, underserved, and credit served
consumers.
“Consumer credit monitoring has expanded considerably in
awareness and usage over the past decade. This expansion has
recently been fueled by the impact of the pandemic on consumer
finances and the heightened familiarity among consumers of becoming
victims of credit fraud,” said Charlie Wise, co-author of the study
and head of global research and consulting at TransUnion. “Our
study measures the importance of credit education and quantifies
the benefits that credit monitoring consumers experience. These
benefits are shown to lead to better credit profiles, greater
access to credit, or an improved ability to pay down debt,
depending on the intent of consumers who monitor credit.”
In the U.S., 86% of surveyed consumers stated that it is at
least moderately important to monitor their credit, with three in
10 saying it’s extremely important. More than half of consumers
(58%) report monitoring their credit at least once per month, with
22% and 10% checking weekly and daily, respectively.
TransUnion surveyed consumers to understand their initial intent
to sign up for credit monitoring services, and the actual benefits
they have experienced in doing so. The most common reasons U.S.
consumers initially signed up for credit monitoring services were
that it was free (35%), to improve their credit score (32%), and to
monitor their report for accuracy (31%).
Additionally, after using monitoring services for some time,
consumers reported added benefits that credit monitoring has
allowed them to achieve: gain visibility to changes on their credit
report (42%), learn how to manage their credit score (41%), detect
fraud (39%), and pay down debt (24%).
The study further identified three distinct segments of credit
monitoring consumers based on their primary motivation for
monitoring their credit. These included Credit Seekers, Credit
Managers and Credit Improvers.
Credit Seekers Benefit from Attaining New
Credit More than half of the credit monitoring population
(55%) is doing so with a goal of attaining new credit. Credit
Seekers are consumers with near prime and above credit scores who
monitor their credit with the intention of opening new credit
accounts in the near future. When comparing Credit Seekers who
monitor their credit to those that do not, credit monitoring
consumers open 1.16x more credit accounts, such as credit cards and
auto loans, over the following year.
Both New-to-Credit (NTC) consumers – those early in their credit
journeys – and underserved consumers – those less engaged in the
credit market overall – also saw similar higher activity for the
credit monitoring segment. NTC consumers who monitor their credit
display 1.21x higher origination rates for any credit product than
those who do not monitor their credit, and for underserved it is
1.24x. Served consumers, those with established credit histories
and readily available access to credit, saw an 1.14x higher rate of
opening new accounts. “For new-to-credit and underserved consumers,
who typically have a more difficult time expanding their credit
wallets, credit monitoring can be a crucial enabler of greater
credit education and access,” said Wise.
Credit
Monitoring Consumers in U.S. Open a Higher Percentage of Credit
Cards, the Most Used Credit Product |
|
Credit Monitoring Consumers |
Non-Monitoring Consumers* |
Overall |
42% |
36% |
New-to-Credit |
48% |
34% |
Underserved |
55% |
50% |
Served |
40% |
35% |
* Non-monitoring consumers were analyzed over the same time
period from the date when credit monitoring consumers with similar
credit profiles began monitoring services
Credit Managers Benefit from Paying Down Debt and
Detecting Fraud As debt levels have risen to near-record
levels in recent years, the study found that many U.S. consumers
(30%) monitor their credit with the intention of keeping an eye on
their overall balances. Credit Managers are defined as consumers
with near prime and above credit scores who generally monitor their
credit with the goal of reducing or maintaining their balances or
monitoring for fraud.
When surveyed, 24% of all U.S. credit monitoring consumers said
they were able to pay down debt as a result of credit monitoring.
In alignment, the study found that Credit Managers decreased their
overall balances by an average of 11% within a year after starting
monitoring. “Though we are in a high-interest rate environment with
consumer credit balances at near-record levels, it’s reassuring to
see so many Americans taking the initiative to ensure they are
paying down or managing their debt levels,” added Wise.
Average
Balance Decrease After One Year of Credit Monitoring in the
U.S. |
Overall |
- 11% |
New-to-Credit |
- 19% |
Underserved |
- 12% |
Served |
- 11% |
Another primary motivation reported by Credit Managers is
protecting against fraud. Four in 10 U.S. consumers (42%) reported
that they continue to utilize credit monitoring services over time
in order to detect and protect against fraud. This benefit is of
increased importance to consumers in light of the continued rise in
fraud activity that has been observed since the onset of the COVID
pandemic.
Credit Improvers Benefit from Improving Scores and
Staying Current on ObligationsCredit Improvers, which make
up 15% of the U.S. credit monitoring population, are defined as
consumers with subprime (poor) credit scores who likely use credit
monitoring to understand their current credit situations and take
steps to improve their credit scores.
The study found that Credit Improvers in the U.S. generally
experienced credit score improvements by an average of 28 points
one year after they started monitoring their credit. The
improvement was even better, at 35 points, for NTC consumers. In
both instances, the improvement was better than a comparison set of
consumers who do not monitor their credit (average 23-point
improvements for both overall population and NTC consumers).
Median Score
Improvement One Year After Starting Credit Monitoring in the
U.S. |
|
Credit Monitoring Consumers |
Non-Monitoring Consumers* |
Overall |
28 |
23 |
New-to-Credit |
35 |
23 |
Underserved |
27 |
12 |
Served |
26 |
22 |
* Non-monitoring consumers were analyzed over the same time
period from the date when credit monitoring consumers with similar
credit profiles began monitoring services
“While Credit Improvers make up the smallest segment of credit
monitoring consumers in the U.S., they also tend to see some of the
most impactful benefits in terms of credit improvement,” said
Lindsey Downing, head of TransUnion’s Consumer Interactive
business. “It’s a clear indication that those consumers who are
actively looking to improve their credit health may achieve better
results if they monitor their credit and are able to plan their
steps and track their progress.”
Free Credit Monitoring Benefits Consumers and
LendersIn an effort to help more consumers easily access
their credit scores, many financial institutions are offering free
credit monitoring tools. This easy access not only helps consumers,
but enables lenders to build stronger relationships with their
customers.
Over one-third of U.S. consumers (35%) said they initially
signed up for credit monitoring because it was free. One in three
of these customers (32%) stated they would prefer the lender
providing free credit monitoring services over other lenders when
opening new products; and 21% said they would prioritize that
lender’s payments over other lenders’ payments.
“Consumers now expect financial institutions to offer free
credit monitoring services, as it allows them to improve their
credit profiles, better manage existing credit, and seek new credit
in the future. Offering such services clearly benefits financial
institutions as many of their customers are more likely to remain
loyal to them for future credit activity,” concluded Downing.
For more information about TransUnion’s global credit monitoring
study, click here. Consumers interested in obtaining their
TransUnion credit report, credit score, and accessing additional
credit planning tools can visit here. Businesses interested in
enabling consumers to better manage their credit health, protect
their identities and control their financial futures can visit
TransUnion’s TruEmpower™ solution line website.
About TransUnion (NYSE: TRU) TransUnion is
a global information and insights company with over 13,000
associates operating in more than 30 countries. We make trust
possible by ensuring each person is reliably represented in the
marketplace. We do this with a Tru™ picture of each person: an
actionable view of consumers, stewarded with care. Through our
acquisitions and technology investments we have developed
innovative solutions that extend beyond our strong foundation in
core credit into areas such as marketing, fraud, risk and advanced
analytics. As a result, consumers and businesses can transact with
confidence and achieve great things. We call this Information for
Good® — and it leads to economic opportunity, great experiences and
personal empowerment for millions of people around the
world. http://www.transunion.com/business
Contact |
Dave BlumbergTransUnion |
E-mail |
david.blumberg@transunion.com |
Telephone |
312-972-6646 |
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