Experian has announced a new partnership with Paylink Solutions, a provider of affordability software and payments, to introduce a debt consolidation solution aimed at addressing affordability issues with debt consolidation loans.
The collaboration will utilise Paylink’s ReFi product to enhance access to credit through the Experian Marketplace.
Debt consolidation is the primary reason consumers search for loans on the Experian Marketplace. However, many individuals struggle to qualify due to affordability constraints.
Experian data indicates that only 37% of debt consolidation loan applications are pre-approved on the Experian Marketplace, compared to 59% for credit card applications. This gap often leads to illegal lending practices, with over 3 million people using unlicensed lenders or loan sharks and more than 10 million borrowing from friends and family.
Currently, lenders face challenges as they cannot directly pay off customers’ existing debts with new debt consolidation loans. This requires lenders to consider both the new loan and existing debts, complicating the underwriting process and often resulting in the new loan being deemed unaffordable.
If granted, there is a risk that the loan will not be used to settle existing arrears, leading to further debt accumulation.
The new partnership aims to address these issues and improve financial inclusion by facilitating better credit access.
Paylink’s ReFi product helps customers repay existing credit commitments by consolidating them into a new loan with more favourable terms. This process simplifies payment management, reduces monthly costs, and lowers the risk of accumulating additional debt.
Experian consumer services managing director Eduardo Castro 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.”
Paylink Solutions CEO Jake Ranson said: “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.”
