By Ray Birch
CHICAGO—A record number of consumers enrolling in credit monitoring services signals an opportunity for credit unions to more closely engage with their membership, according to TransUnion.
As CUToday.info reported, from the beginning of 2018 through September of 2023 more than 100 million U.S. consumers enrolled in a service from TransUnion that allows them to monitor their credit. According to the company, its analysis found the majority of Americans doing so have a near-term goal of opening a new credit account (55%), while 30% monitor their credit to better manage their debt levels and 15% are seeking to improve their credit scores.
“We've seen this explosion in credit monitoring in the last five years—100 million people have started monitoring their credit, at least as far we're able to see,” Charlie Wise, head of global research at TransUnion, told CUToday.info. “A lot of that stems from what we've seen over the last several years—this huge growth in consumer debt, particularly credit card debt since 2021, and this continued uptick in fraud. So, consumers have clearly understood the importance of credit monitoring.”
The Big Question
Wise said the big question raised by this shift is whether or not consumers benefit from credit monitoring.
“I think we've shown they definitely do, depending on their motivations,” Wise said. “Whether it's to improve their score, to get new credit, open new accounts or even just to manage their existing credit. In all these cases we see that the people who actually use credit monitoring are achieving those goals at higher rates than those who don't.”
Benefit to Financial Institutions?
Can financial institutions benefit from the shift, as well?
“We see that a lot of consumers who are getting access to credit monitoring are getting it through their lender or through their primary banking institution, who make these services available to them for free,” Wise said. “The consumer doesn't have to pay, and that's a big convenience. It's embedded within the financial institution’s website or their app. It's very integrated as consumers track their progress.”
For financial institutions, there are several benefits the study data show, Wise said.
Charlie Wise
“There is a very important benefit around loyalty. We asked consumers, ‘Does making credit monitoring make you think more favorably of your FI? Does it make you more loyal to that to that institution?’ They definitely said yes. They also said that if they’re considering opening up a new account they are more likely to do it through the lender that makes credit monitoring available. That’s a real benefit for lenders, a real loyalty effect that can help create and deepen relationships with consumers.”
Leveraging ‘Early Insights’
Wise said data show further show consumers who monitor their credit typically improve their scores and have higher credit activity over the next year—“which lender like,” he reminded.
For consumers with good credit scores, Wise said a prime target identified in the data are those in the “credit seeker.”.
“The lender has early insights into their needs, as they see them sign up for credit monitoring,” Wise explained. “So, maybe I want to offer them a new credit card, auto loan, even a mortgage because they're going to be in that credit-seeking mode sometime in their future. For example, if the lender sees Charlie Wise is checking his score more than another member, that tells the lender something…that they should pay more attention to me.”
A ’Sign’
Wise pointed out the data show that those who begin credit monitoring typically do see material improvements in their score over the next year.
“Not everybody, but on average they did. That, again, is a sign to the lender that possibly these folks could be ripe for different types of offers,” he said.
Wise asserted that when consumers who have lower credit scores begin monitoring their credit it typically means they will become a more trustworthy borrower. And, too, it often signals the consumer is at a tipping point—on the road to becoming a stronger and more active credit union member.
“It often can be a sign they are on a positive trajectory,” he said.