Experian has, today, announced that ReFi™, a leading debt consolidation technology from Paylink Solutions, will become part of the Experian Consumer Services Marketplace, in a boost for consumers and lenders with debt consolidation and affordability challenges.
Research from Experian, compiled for Fair 4 All Finance, reveals that 41 million UK consumers have credit products, with 83% (34 million) of these involving revolving debt that remains unoptimised1. Debt consolidation remains the number one reason consumers search for loans on the Experian Marketplace, however, many individuals who need these loans struggle to qualify due to affordability restrictions.
Currently, when consumers apply for a debt consolidation loan there is a risk of ‘double counting’ as it is assumed their original debts are considered as part of the affordability assessment along with the new consolidation loan. This is because lenders can’t be certain that the funds will be used to repay the existing debts, resulting in creditworthy consumers being declined for a loan based on affordability reasons and leaving them stuck in a debt trap.
ReFi™ solves this issue by working with lenders and consumers to settle a consumers’ debts directly with their existing creditors, giving lenders confidence that existing debts will be settled, the consumer only needs to be assessed for the requested debt consolidation loan. As part of the process, previous accounts are then closed once the debt has been paid off, making the debt consolidation process as simple as possible for consumers.
Experian data reveals that just 37% of debt consolidation loan applications are pre-approved on the Experian marketplace vs 59% pre-approval for credit card applications2. This vacuum can lead to illegal lending practices, research shows that over 3 million people have used an unlicensed lender or loan shark, while over 10 million have borrowed from friends and family.3 ReFi™’ will enable the data technology firm to leverage its unique capabilities to offer enhanced support to consumers struggling with debt, while also providing lenders with the tools needed to unlock affordable and creditworthy lending opportunities for UK consumers.
Edu Castro, Managing Director of Experian Consumer Services, said: ”Our research shows that millions of consumers are stuck in a revolving debt trap, due to the systemic issue of ‘double counting’ when consumers apply for debt consolidation products. ReFi™’s innovative solutions will play a crucial role in addressing the debt challenges faced by many consumers, unlocking access to debt consolidation products that could help them save money on their debt and even pay it off sooner.
“Adding ReFi™ from Paylink aligns with our mission to empower consumers and support lenders in making informed, responsible lending decisions.”
Jake Ranson, CEO of Paylink said: “The team who built ReFiTM feel tremendously privileged to already have helped thousands of people reduce their monthly outgoings and cut the amount of interest they have to pay overall. Becoming part of Experian will enable us to further innovate, accelerate and grow the impact ReFiTM will have on delivering better outcomes for lender and borrower alike.”