With most financial information being digitally managed, there are endless possibilities for Fintech startups to innovate solutions to common problems. Fintech’s ability to make life more convenient is only limited by an entrepreneur’s ability to dream. The United Kingdom might be ahead of the game when it comes to startups making consumer life easier. A Fintech startup, ClearScore is about to become a consumer’s best friend. ClearScore is a tool that helps consumers manage their financial data and access their credit report — without having to pay for it.
ClearScore gives consumers access to their data
Five million UK residents access their credit report every year. Why don’t more people check their credit? Studies revealed that out of 15 million people who have never accessed their credit report, 4 million are put off by the price tag. Co-founded by Justin Basini, Nigel Morris, and Dan Cobley, ClearScore is driven by the passion to make the world of finance easier and more accessible. Basini says, "It’s not fair that people have to pay for access to financial information about them that affects their lives." ClearScore is backed by significant investment from Brightbridge, Blenheim Chalcot, and QED Investors. All three entities have a track record for investing in successful businesses in the financial sector.
Life depends on credit history
Trying to get your credit report can be frustrating and costly. When you’re trying to get approved for a car loan or a house, you have no choice; you need to know what’s on your report. Credit scores affect every aspect of your life, determining whether you can buy or rent property, or even get a cellphone. Your credit score can also affect your car insurance rates and your ability to get a job. Providing consumers with regular, free access to their credit history is a revolutionary move Fintech startups in the U.S. should take note of.
Access to credit reports in the U.S. has been challenging
In the U.S., consumers are entitled to access their credit reports from all three agencies (Equifax, TransUnion, and Experian) free of charge once per year. As outlined in section 211 of the Fair and Accurate Credit Transactions Act, "All consumer reporting agencies described in subsections (p) and (w) of section 603 shall make all disclosures pursuant to section 609 once during any 12-month period upon request of the consumer and without charge to the consumer."
Getting a free credit report isn’t as easy as it seems. Some people get taken by scams while trying to obtain their credit report. Others get enrolled into programs with monthly fees. Still, other companies provide a free report from one credit bureau and require a payment to receive reports from the other two. In the U.S., there is only one government approved source that provides a free yearly credit report from all three agencies, but not everyone knows this.
Having a tool like ClearScore in the U.S. would eliminate most of the problems consumers face when trying to access their credit history.
ClearScore could make its way to the U.S.
It’s not clear whether ClearScore plans to make credit reports available to U.S. consumers free of charge. It may take a U.S. based Fintech company to bring that about. Either way, ClearScore is setting the example for what consumers want and need, and it couldn’t have come at a better time.
Credit score calculations are changing — in the consumer’s favor!
There are big changes coming to the way credit scores are calculated. VantageScore, a company created by the three major credit bureaus, is implementing the new calculation method.
The benefit to consumers is that the trajectory of a person’s debts will be considered on a monthly basis. For instance, someone who is consistently paying down their debt is going to get a better score than someone who makes minimum payments while accumulating more debt.
The downside is a consumer can be scored lower for having multiple open accounts and high credit limits, even if unused.
The changes are designed to identify warning signs long before a borrower gets into trouble. VantageScore’s senior vice president, Sarah Davies, says, "When it comes to prime borrowers, you may not have bad behavior on your credit file, but a trajectory provides very powerful information."
This is a loud call to action for U.S. Fintech startups to do what ClearScore is doing for UK residents. A service like ClearScore in the U.S. would be an enormous asset to consumers as these changes are implemented.
Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. To read more of his reports — Click Here Now.
© 2021 Newsmax. All rights reserved.