The positive impact that credit education can have on your customers
When your customers have stable finances and better credit they're not only likely to pay their bills to you on time, they're also likely to qualify and be interested in purchasing additional products and services. And it is credit education tools provided by you that can help them get and stay fiscally fit while turning them into loyal fans of your business.
For example, Experian found that companies that provide its credit education product to their customers averaged a 21-point increase in their VantageScore credit score over a 12-month period.
This kind of benefit can be particularly valuable to millennials and other younger customers. One Experian survey found that 76 percent of 18 to 24-year-olds are interested in financial or credit educational tools or assistance. That comes as no surprise since half of millennial consumers have no idea whether their credit score is good or bad and more than half have had an issue with credit card spending or late payments.
According to research conducted by the Financial Industry Regulatory Authority Inc. found that, “When a rigorous financial education program is carefully implemented, it can improve the credit scores and lower the probability of credit delinquency for young adults.”
Even businesses not directly involved in providing financial services can see benefits from a structured, professionally created credit education program, especially with households carrying an average of nearly $9,000 in credit card debt at rates of nearly 15 percent. Retailers, for example, understand that credit education is an important aspect of increasing customer purchasing power and a good way to widen the pool of potential customers.
Another troublesome issue confounding consumers is the increasingly common problem of data breaches, hacking, and scams that hijack their personal information to drain their bank accounts or commit fraud. Already during 2018, nearly 1,000 dangerous data breaches have exposed the personal data of more than 47 million consumers, including 1.7 million records hacked at banking, credit and financial institutions.
These data breaches can prompt consumers to avoid shopping with online retailers, disrupt their ability to make convenient credit purchases for months or even motivate them to change credit providers. Nearly 1 million consumers drop their financial institutions for new issuers each year because of fraud, according to Javelin Strategy & Research, moving a total of $4 billion in credit card spending.
As with credit education, providing the tools and information to help consumers protect their financial, health, Social Security and credit data, as well as that of their children and other family members, can cut business losses and prevent problems, encourage consumers to make additional purchases and strengthen customer engagement with the business.
According to the 2018 Trust Barometer from Edelman marketing consultancy, almost half of Americans do not trust businesses to do what’s right. Providing credit education and identity protection services – especially when it goes beyond your core business – can help improve customer loyalty, engender consumer trust, generate goodwill, word-of-mouth recommendations and provide additional leads and revenue.