Experian has announced its new partnership with Paylink, a provider of affordability software and payments, to address affordability restrictions with debt consolidation loans.
This partnership will leverage Paylink’s ReFi product and “expand access to credit for a wider range of consumers through the Experian Marketplace.”
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.”
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 applications.”
This vacuum often leads to illegal lending practices and “over 3 million people have used an unlicensed lender or loan shark while over 10 million have borrowed from friends and family.”
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 allowing 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 favorable terms.”
This approach not only simplifies managing payments but also “reduces monthly costs and mitigates the risk of accumulating additional debt.”
As noted in the update, Paylink is a “provider of financial technology, dedicated to helping people understand their financial position and pursue their financial objectives.”
With a strong focus on innovation, Paylink has a track record of “delivering customer affordability solutions to some of the biggest names in the banking, financial services and utilities sectors.”
