Latest news with #TransUnion
New York Times
9 hours ago
- Business
- New York Times
A Way for People With Low Credit Scores to Raise Them
People who pay their rent on time can establish credit scores or significantly raise low scores if the payments are reported to credit bureaus, new research found. A study published this month by the Urban Institute, a think tank in Washington, D.C., looked at two groups of tenants recruited in 2021 and 2022. The members of one group began having their rent payments reported to credit bureaus immediately after signing up to participate in a program offered by their properties. The members of the other group had their rent reporting delayed by four months. The study found that rent reporting leads to 'large, statistically significant increases' in the likelihood of having a score and of having at least a 'near prime' score — a minimum of 601 on a scale of 300 to 850. The research was the first rigorous, randomized study of 'positive' rent reporting, said Brett Theodos, a senior fellow at the institute and an author of the study, which enrolled 269 participants in affordable housing programs in five states and Washington. In positive rent reporting, only payments made on time are supplied to credit bureaus. The study used VantageScore, a competitor to the widely used FICO score. VantageScore, which uses a scale similar to FICO's but assigns different weights to certain factors, was founded by the three big credit bureaus: TransUnion, Equifax and Experian. Still, some consumer advocates remain wary of rent reporting, saying it may pose risks to vulnerable renters. Want all of The Times? Subscribe.
Yahoo
21 hours ago
- Business
- Yahoo
Credit scores will drop for more student loan borrowers, data shows
Imagine your credit score suddenly dropping by 63 points. For more than four million federal student loan borrowers, that's no nightmare. It's a wake-up call. In fact, a 63-point drop was just the average. Many of these borrowers experiencing a serious delinquency — at least 90 days late on a payment — in early 2025 saw their credit score drop by 42 to 175 points, according to a May analysis by the credit bureau TransUnion. And no one is immune. Borrowers with strong credit histories and cleaner credit reports saw their scores drop the most, by up to three figures. Even scarier? These borrowers could soon have more company. Some of the nearly eight million enrolled in the decaying SAVE Plan may soon face delinquency. So too could borrowers who have been struggling to enroll in income-driven repayment (IDR) plans. 'We're just waiting for them to be reported — we're calling those the shadow delinquencies,' says Michele Raneri, TransUnion vice president of financial services research and consulting. Yes, more than one in every five federal student loan borrowers in active repayment — 20.5 percent of about 19.6 million individuals — are three months or more late on their monthly dues. That's an all-time high, according to TransUnion, in part because Raneri says her team filtered out millions of federal loan borrowers who don't have an active payment due date. According to the Department of Education's own figures, that means more than five million borrowers are in default (270 or more days tardy), and as many as 10 million could be this summer. Being in default hits your credit, but it can also mean wage garnishment and forfeiture of federal tax refunds and Social Security benefits, among other consequences. 'So everything indicates that [this] is just the first group' to be reported, Raneri says. Related: We're facing a student loan default crisis. This academic research might help As mentioned, 20.5 percent of borrowers are 90 or more days delinquent (as of February 2025), but that figure pales in comparison to the 11.5 percent who were similarly tardy five years ago. Secretary of Education Linda McMahon places the blame squarely on colleges and universities, but the COVID-19 pandemic-inspired repayment pause and the last half-decade's fallout undoubtedly play a role, student loan payments are paused, borrowers saw their credit scores increase by an average of 74 points, thanks to the pause, according to the New York Federal Education Department announces 'Fresh Start,' removing the default status on credit reports for about 7.5 million defaulted Education Department calls for the resumption of monthly loan servicers begin reporting 90-days-or-more delinquencies to the credit Education Department resumes debt collection for federal loan defaults. In case you'd like a refresher, payment history is the single biggest determinant of your credit score. For FICO scores, for instance, whether you're on time or tardy with debt payments accounts for 35 percent of your score composition. That explains why borrowers have seen their scores fall so precipitously. Credit score before defaulting Average credit score drop after default (pts) 300 to 600 42 601-660 64 661-720 99 721-780 121 781 plus 175 Though borrowers with super-prime credit are the least vulnerable cohort, their path back to excellent credit won't be easy, Raneri says. 'They probably didn't have a 90-day-past-due on any [account] in the last seven years,' she says. 'And so it's difficult to come out and still become a super-prime again… And it'll take a couple of years probably for that to be in the rearview mirror, for it to fade away enough for it to bring the[ir score] back up.' Unsurprisingly, the lower your credit score, the more likely you have fallen behind in repayment. However, over the past half-decade, higher-credit borrowers have seen the biggest jump into delinquency. Percent of borrowers who are at least three months past due on a federal loan February 2020 February 2025 Percent change 300 to 600 38.8% 50.8% 31% 601 to 660 9.1% 23.3% 156% 661 to 720 1.3% 7.5% 477% 721-780 0.1% 2.1% 2,000% 781-plus 0.1% 0.9% 800% Spoiler alert: What's good for your student loan repayment is mutually beneficial for your credit report and score. Rehabilitate a defaulted loan, and your credit will thank you. Make a series of on-time payments toward your outstanding balance, and your score should increase over time. Of course, it's all easier said than done. And it can be overwhelming when you're wondering where to start. She continues, 'And so, if you have a fear of your credit, then you need to buckle down and just do it because it's not going to just go away. And I feel like there [are] people who with these student loans are kind of gambling with their credit score, thinking that maybe some [relief] is going to come through and it's not going to affect them. And by the time that you see it, it's probably too late. And then you have to start repairing it.' Take it from a certified student loan counselor: The important thing is to get moving. Here are some initial steps to take if your repayment has gone awry or requires a reset: Create or update your budget. It's the best way to understand your cash-flow, minimize unnecessary experience and set priorities, whether for your student loan or other debt payments. Reacquaint yourself with your education debt. You might log into your account (or your private lender's portal) to check your outstanding balances, interest rates and repayment status. Ask for help. While it's critical to be your own expert on your student loan accounts, it's always wise to request assistance. If you're disappointed in your federal loan servicer or private lender, talk to a certified counselor, student debt lawyer or organizations that offer student loan help. Settle on a strategy. Once you know where you stand and are aware of your education debt payoff options, picking a lane will ensure you keep moving toward the finish line. With that said, changes to your cash-flow could necessitate switching tactics down the road. Start or resume monitoring your credit. As you're getting more confident about handling your outstanding loans, track the improvement of your credit score. That can be gratifying and motivate you to stay on track to the bitter end. How to find help The National Foundation for Credit Counseling or your state's student loan ombudsperson are potential starting points. You're also welcome to email the writer at apentis@ Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
a day ago
- Business
- Yahoo
Borrowing a personal loan during these uncertain times? We asked 5 industry experts about what you should know.
Twenty-five million Americans have an unsecured personal loan, double the number from a decade ago, says TransUnion senior vice president Josh Turnbull. 'So the unsecured personal loan is increasingly a powerful tool in the variety of financial products available to and used by consumers… up and down the credit spectrum,' says Turnbull. The question is: If you're looking to borrow one during these uncertain economic times, what should you know? We asked five industry experts, including Turnbull and J.D. Power's head of lending intelligence, Bruce Gehrke, as well as three executives from lenders: Alliant Credit Union director of products Sean Briscoe, Best Egg president Bobby Ritterbeck and USAA head of product Scott Serpico. These interviews have been edited for length and clarity. A trade war is being fought on multiple fronts (or is it? asks the U.S. judiciary). The inflation rate remains stubbornly above the 2 percent target. Even the Federal Reserve appears reticent to forecast. And at various times, the stock market's jagged trend line has resembled the vital signs monitor of a touch-and-go hospital patient. So, what does all of that mean for those of us shopping around for a personal loan? Ritterbeck: 'When you look at this year so far, it's been a lot about noise around tariffs and what that could cause. We're still in the early stages of that… What it's definitely done is caused a lot of uncertainty for consumers. Another thing, from a recipe standpoint, that's not ideal. As soon as consumers get uncertain, they don't have confidence, that can lead to some negative credit outcomes as well.' Gehrke: 'One of the things that personal loans are used for, when we ask about [borrowers'] motivation, is large purchases, whether that be appliances or other large purchases around the home. And there's definitely — we saw this in other consumer studies — a preference toward delaying large purchases, kind of a wait-and-see attitude.' Briscoe: 'Another thing we're seeing from consumers is preparing for the unexpected, where they are trying to consolidate debt, thinking about what happens if inflation continues to grow and when [their cash-flow] gets tighter and tighter on a monthly basis. So, that's definitely been a shift that we've seen over the last year or so.' Related: J.D. Power: 3 in 4 personal loan borrowers don't feel "financially healthy" In some ways, personal loan lenders are behaving like the most insulated consumers. They face uncertainty, but instead of making drastic decisions, they're monitoring the economy and planning for multiple scenarios. As a consumer and potential personal loan borrower, it might behoove you to similarly take the long view. Still, if you're not well-insulated (maybe your emergency savings needs replenishing or your income is on shaky ground), it'd be nice to know whether personal loan borrowing will be an option at all. Related: How to prequalify for a personal loan Ritterbeck: 'When inflation was at its peak [in 2022], you saw a lot of tightening of the belts [among lenders]. As inflation has gotten under control, you've seen a little bit of loosening from the creditor side. And I don't think this recent noise [around tariffs] has made a material difference yet in changing that, that current pace.' Turnbull: 'The most recent quarter for which we have origination data [the first quarter of 2025], personal loans are up over 25% in terms of origination. So, there's a lot more lending happening now than there was a year ago. And the distribution of who those loans are going to is relatively unchanged. So, we've already seen lenders feeling much more confident.' Serpico: 'Having been doing this for 26 years, I think it's pretty normal to see lenders make subtle adjustments as part of good hygiene of managing their book… We've seen that play out through all the economic cycles. I'm not seeing anything of note yet in [the] market of saying there's any drastic moves by any particular lenders that are ultimately loosening or tightening.' Gehrke: 'It's delinquencies [if they rise] that will impact risk management among lenders. So, you may see some pullback on the types of loans that they're making… We've seen the fintechs stretch that envelope. There [are] some proprietary systems out there that are trying to identify creditworthiness through other means, other than purely looking at credit scores. And they have expanded lending [for] some consumer groups. You may see some contraction to that.' 30 days late 60 days late 90 days late Q1 2025 5.3% 3.5% 2.3% Q1 2024 5.4% 3.8% 2.5% If you have credit card debt with an average APR of around 20 percent, refinancing it to a personal loan with, say, a 12 percent rate might seem like a no-brainer. Why wait? And if rates descend, you could refinance again. But for more discretionary borrowing, you may want to monitor lenders' advertised basement APRs. In fact, nearly 7 in 10 consumers who are considering a personal loan have already researched rates, according to an April Santander survey. 'As the trade wars have picked up and that uncertainty has grown, that timeline of rates coming down has been pushed out and out and out to the point where it's really unclear if and when they will and to what degree,' says Alliant Credit Union's Briscoe. 'And so, when we work with our members, typically what we'll say is, 'Start with what matters to you and your financial situation, because sometimes you could be waiting for a rate decline that never comes.'' Average interest rate on a two-year personal loan 2025 (Q1) 11.66% 2024 12.27% 2023 11.87% 2022 9.87% 2021 9.38% 2020 9.51% Related: Personal loan interest rates forecast Turnbull: 'Relative to where we've been, interest rates are high. Relative to a longer arc, interest rates are not necessarily high… But there's value in a personal loan in that I know what the rate is going to be, I know what the payment is going to be over time versus a variable-rate instrument. So, to some extent, people are drawn to an installment type product, [considering] where we are now.' Ritterbeck: 'Where rates are going to go has become anybody's guess. For the last two years, it's always been an expectation that they're going to drop and they didn't, they didn't, they didn't. They did a little, but we expected a lot more. And then, we kind of are where we are. And some of the uncertainty is keeping [rates] from moving up or down.' Serpico: 'If you're following the markets, it's very fluid. But I think it's important to watch the macro trends. Look at jobs, look at inflation data, look at overall spending, look at debt load. I think right now, again, we're very much in this wait-and-see period… We're watching what the Fed will do.' Related: Current average personal loan rates While buy now, pay later loans might seem like the closest facsimile to personal loans, the vast majority of BNPL customers use them for shorter-term needs and as a replacement for the plastic in their wallets. Home equity loans and lines of credit, on the other hand, are more often a worthwhile alternative to personal loans for homeowners. That's partly because they can help you achieve the same ends, whether that's debt consolidation or covering a personal expense. Of course, these products do it in different ways. Personal loans are typically unsecured and eligibility is based on credit. Home equity products, by their very nature, are secured. They take your credit into account to determine your interest rate and terms, but you must have sufficient equity in your home to be eligible at all. Gehrke: 'We're seeing some competition there because generally you're getting a better interest rate [on home equity products] than you would with an unsecured personal loan. There is… some of what I would call the 'hangover' from the [2008] financial crisis, where people really shied away from home equity loans because they didn't want to put their home at risk. That memory is kind of fading a little bit. And some [newer] homeowners now didn't live through that. So, they're more willing to go to that product for liquidity. Ritterback: 'The bright side for home equity in this country is that the total home equity has never been higher than it is today. So, people's ability to tap into their home equity is very strong today. Rates are not what they once were, but relative to unsecured credit, it's a great alternative. It's just slower and a little bit harder. You have things like much longer timelines, you have costs associated with it, like appraisals… versus a personal loan, [which] is a much easier product.' Briscoe: 'Most of all, we see that the lines across products are blurring. We're now seeing home equities that look and feel more like a credit card. And there are pros and cons to those things, but the line between payments and lending is starting to blur as technology is allowing more and more of these types of solutions.' Related: Personal loan vs. home equity loan: Which is better? Whether you're a potential applicant or current borrower, it never hurts to hear from the experts, particularly given the economic uncertainty ahead. Hopefully, their wisdom can help you avoid common personal loan mistakes. Serpico: 'It's going to be really prudent for consumers to take a hard look at their debt load and find ways to improve their credit… to make sure they put themselves in a position that could qualify for that loan or to capitalize during the upcoming cycle.' Ritterbeck: 'Being comfortable using debt to accomplish what you need to, that's an OK thing… if you [borrow] in a way where it's like, 'Hey, I'm just not taking that extra three grand that I need. I'm actually going to take this opportunity to put myself on a structured path to get into a better spot from a personal balance sheet perspective.' I think that's something to be proud of and not ashamed of. I'm shocked at how much shame comes into the financial decisions that people make.' Briscoe: 'If you are using that product, that loan for debt consolidation, don't add additional debt on top of it. The worst thing that we see folks run into is they will consolidate credit cards into a fixed-rate loan, and while they're paying that loan back, the credit card balances start to grow again… And then the next time you're looking to consolidate, it's twice as large of a loan, and then the third time, you've kind of overextended yourself.' Turnbull: 'As a consumer, if you find yourself in a situation where you don't know how you're going to make that next payment on your personal loan, call [your lender]. It is in everybody's best interest that you have that awkward conversation with the lender. And I think people are often surprised how willing lenders are to work with borrowers to find a way to keep that from becoming a fraught situation.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Maverick
2 days ago
- Business
- Daily Maverick
Africa's first telco data credit score aims to bring the ‘invisible' into the financial fold
TransUnion and Chinosis have teamed up to create Africa's first telco data credit score and bring millions of 'invisible' Africans into the financial fold. Just 13% of South African adults have a credit card, which is a small fraction of the population participating in the financial ecosystem. Financial service providers rely on a rigid credit scoring framework to gauge whether someone is a viable borrower. This results in a huge pool of people who operate outside this view, stranded in a financial blindspot. A partnership between TransUnion and Chenosis, an MTN Group technology venture, aims to change this status quo. The two companies are set to launch Africa's first phone data-based scoring system by Thursday, 3 July. A new lens for old blindspots The continent's financial ecosystem mirrors its colonial borders: fragmented, exclusionary and sometimes slow to evolve. 'Exclusion is part of the African narrative,' said Lee Naik, TransUnion CEO, reflecting on his own roots in Chatsworth, an Indian township in KwaZulu-Natal, where he grew up under apartheid. 'When I say I can feel what it means to be disconnected from the broader ecosystem, it's literally how I grew up,' he said. Africa has more than 350 million people who are disconnected from the financial system, and yet more than 510 million are subscribed to mobile services. 'For many Africans, for many South Africans, we feel disconnected. Having access to mobile telephony isn't the answer in itself,' Naik said. 'We all want to be heard. We all want to be seen. We all want to be known. The question is, does telco data allow us to do that?' Your phone is a financial mirror The scoring system parses numerous signals – how frequently a phone is used, phone number stability and phone swapping, to name a few – to piece together a view of financial activity. 'A mobile device is not just a device. It helps you get a view of the reflection of how a person lives,' said Waheem Amra, head of product and platform at Chenosis. If you look at someone's recharge pattern, for instance, it might give you insights into how they earn and manage their money, Fatgie Adams, TransUnion's head of credit risk solutions, said. Another metric taken into account is sub-tenure, which is how long you've had your mobile device, along with how long you've had a phone number, he explained. If you've gone through six phone numbers in a short period, it signals something different than someone who sticks with their number, he explained. 'We don't just collect this data. We aggregate it over time so it's physically sound. We transform it and structure it and pass it on to a translator.' Amra explained that the group of people this system aims to aid are not financially inactive. The problem is rather that traditional credit scoring systems can't see how they spend their money. Tackling financial exclusion According to Naik, about 16 million South Africans remain excluded from the financial system and another four million are underserved. The new scoring system aims to bring these people into view by interpreting financial behaviour previously dismissed. 'Are we adequately and accurately assessing these individuals for their creditworthiness?' Adams asked. 'Or are we merely declining them because they don't look like the borrowers of the past?' The system has implications beyond individual borrowers. Providing financial products to small businesses employing between one and five people can act as a way to address unemployment in the continent, Naik said. How does this affect you? Ease of access to credit: If you're a South African with a meagre or non-existent credit profile, this scoring system could help you borrow money. An opportunity to progress: Better credit means lower borrowing costs, a chance to move from the informal to the formal financial sector, and a path towards financial stability. Financial independence: Access to loans can empower you to pursue goals, like starting a business, improving your home or sending your children to school. Small business growth: Small enterprises can use this scoring to access funding and employ more people. Privacy, consent and trust Of course, accessing phone data brings responsibilities. TransUnion says that consent, compliance with the Protection of Personal Information Act and scalable trust are all baked into this system. 'Before any data can be transferred we get consent from the customer, but they can also opt out of it,' Amra said. 'It's a transparent process where the customer is completely in control.' Every confirmation of consent is also time-stamped and audited, adding another layer of oversight to assure both consumers and lenders that the data is fair and transparent. A precedent for Africa In trialling this scoring approach with major South African lenders, the two companies found that 1.9 million previously 'invisible' people fell into view, a 35% improvement in predicting credit performance and a 20% drop in bad debt. Today, TransUnion operates in eight African markets. The goal is to expand this system to all 54 countries on the continent and onboard more telcos, Naik said. The telco data score isn't meant to replace traditional credit scoring, but to get a more complete picture of an individual, Amra said. 'We didn't just create a product, we created a new capability for the industry.' DM
Zawya
2 days ago
- Business
- Zawya
South Africa: Leanne Emery-Hunter named Tshikululu Social Investments CEO
Leanne Emery-Hunter will serve as the chief executive officer (CEO) of Tshikululu Social Investments from Tuesday, 17 June 2025. Emery-Hunter has a strong record of leading innovative, high-impact organisations, having most recently been the chief commercial officer of the Youth Employment Service (Yes), a private sector-led programme focused on addressing youth unemployment. Further underscoring her credentials, Emery-Hunter holds an MBA with distinction from the Gordon Institute of Business Science (Gibs) and was a finalist in the 2022 TransUnion Rising Star Awards (public and private). 'I am honoured to join Tshikululu, an organisation with a proud legacy of driving meaningful change through strategic social investment. As we look to the future, I'm excited to build on this foundation and explore bold, innovative ways to deepen our impact and help shape a more inclusive, resilient South Africa,' says Emery-Hunter. Tshikululu works with social investors and partners to design and implement high-impact social investment strategies, social development programmes and environment, social and governance (ESG) solutions to address poverty, inequality and unemployment in South Africa. Since 1998, Tshikululu has facilitated millions in funding toward sustainable, measurable development outcomes. Over the past year, Tshikululu has managed social investments that directly benefit 180 social partners on behalf of their clients countrywide. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
