Experian, the multinational data analytics and consumer credit reporting company, is partnering with Paylink, an affordability software and payments provider, to address affordability restrictions with debt consolidation loans.
Through the new partnership, Experian will leverage the ‘ReFi’ product by Paylink, expanding access to credit for a wider range of consumers through the Experian Marketplace.
This collaboration comes as debt consolidation remains the main reason consumers search for loans on the Experian Marketplace, however, many individuals who need these loans struggle to qualify due to affordability restrictions.
Experian data found that just 37 per cent of debt consolidation loan applications are pre-approved on the Experian marketplace, compared to 59 per cent pre-approval for credit card applications. This vacuum often leads to illegal lending practices. In fact, over three million people have used an unlicensed lender or loan shark, while over 10 million opted to borrow from friends and family.
Eduardo Castro, managing director of Experian Consumer Services, said: “As people continue trying to get on top of their finances amid the increased cost of living, our aim is to remove any barriers that will prevent them from doing so. Our new partnership with Paylink will allow us to unlock access to credit for more consumers seeking to simplify the process of managing their debt.
“The benefit of this partnership is twofold, as the ‘ReFi’ solution offers a valuable tool for lenders to expand their offerings and reach a broader customer base that may have originally been overlooked.”
Enabling a financial ‘reset’
Currently, lenders are unable to directly pay off customers’ debts when they take out a debt consolidation loan, instead relying on customers using the loan funds appropriately. This complicates the underwriting process as it means lenders need to double count both the new loan and existing debts, often resulting in the new loan being deemed ‘unaffordable’. If granted, there is a risk that the new loan will not be used to pay off existing arrears and the customer ends up accumulating more debt.
This partnership aims to address these challenges and enhance financial inclusion by improving access to credit. ‘ReFi’ by Paylink facilitates this by enabling customers to settle existing credit commitments with lenders through a streamlined process. It repays legacy debts – such as credit cards, personal loans, retail credit, and overdrafts – by consolidating them into a new loan with more favourable terms. This approach not only simplifies managing payments but also reduces monthly costs and mitigates the risk of accumulating additional debt.
Jake Ranson, CEO of Paylink, also commented: “Against the backdrop of a prolonged cost of living crisis, ‘ReFi’ has already proved its value to thousands of customers who, by shifting legacy debts to a new more affordable loan, have transformed their monthly household budgets.
“ReFi enables a financial ‘reset,’ potentially leading to significant savings and quicker debt repayment. It also provides lenders with assurance that the new loan is affordable and will be used to clear previous debts, helping customers achieve their financial goals.
“With unparalleled access to data, analytics and market insight, Experian is singularly placed to help ReFi reach thousands more people seeking to realise the opportunities access to reasonably priced credit brings.”
