The tech that boosted a Tennessee credit union's consumer loans

To educate members about how to properly manage their debt, and promote a suite of financial products, Knoxville TVA Employees Credit Union in Knoxville, Tennessee, began automatically enrolling members in its credit-scoring tool that helps them understand how they can improve their creditworthiness. Within 45 days, it had doubled its consumer loan balances booked through the tool.

The credit union has tapped into an overarching trend: Consumers are keen to keep an eye on their credit scores and credit data. According to Chicago-based credit bureau TransUnion, more than 100 million people across the U.S. enrolled in a service to monitor their credit data from the organization between the start of 2018 and September 2023. Roughly 55% of those who signed up did so as part of a near-term goal of opening a credit account, with 30% focused on managing debt levels and 15% seeking to raise their credit scores.

"If you know what your score is and what you qualify for, it gives you additional confidence that you might feel more empowered to go and seek credit [opportunities]," said Charlie Wise, co-author of the study and head of global research and consulting at TransUnion. "These consumers seem to enjoy greater success at getting credit than those we don't see monitoring their credit."

Knoxville TVA originally partnered with the Dublin, California-based credit score technology firm SavvyMoney to show members a real-time credit score, let them set goals for improving their scores, and showcase which Knoxville TVA financial products and services they prequalify for. The score is calculated using data from TransUnion and VantageScore models.

In March, due to increasing member interest around credit scores, the credit union changed the enrollment process for the scoring tool: Instead of having to opt in, consumers opt out if they don't want the free service.

The fintech's product is integrated into the $4.3 billion-asset credit union's digital banking experience using a combination of application programming interfaces and web browser embeds. 

Member engagement was promising in 2022, when new credit members had to proactively opt in to the new credit score, according to Denise O'Dell, vice president of electronic services for the credit union. But after it shifted to an opt-out model, user engagement jumped to roughly 99% of Knoxville TVA's membership within the first 45 days.

"As a credit union, we've got a real focus on financial wellness and member education, so we wanted to provide a way for members to be able to see that score, and tips on how they can improve it," O'Dell said.

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Within a member's online banking portal, SavvyMoney's credit score tool allows for real-time calculations as well as listing what factors impact the metric. (Knoxville TVA Employees Credit Union)

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Within the module, members can simulate score changes based on what financial products they apply for and set goals for improving their current score. (Knoxville TVA Employees Credit Union)

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Executives of Knoxville TVA can aggregate data used by the scoring tool to view metrics such as product engagement and effectiveness of marketing campaigns, while also seeing how members' scores are trending. (SavvyMoney)

Prequalified offers work in conjunction with Knoxville's loan origination system. Fueled by the scoring tool, and using a shortened application process to remove the need for members to input already filed information such as home address and Social Security number, the credit union saw funded loan volume across its credit card, personal and auto lending portfolios nearly double.

"In 2022, we averaged about $725,000 per month in funded SavvyMoney offers. … In the first three months of enabling auto-enrollment, that went up to $1.4 million," O'Dell said, leading the credit union to shift marketing priorities from loan offers to deposit offers as part of managing liquidity requirements. The credit union can select which products to advertise within the credit-scoring module and view metrics like consumer engagement and application volume.

As beneficial as these tools can be, regulators with the Consumer Financial Protection Bureau and other agencies have continued to crack down on disparities in the reporting process in the hopes of expanding access to credit.

Daryl Jones, senior director at Cornerstone Advisors, said that increased transparency into how scores are calculated and what behaviors influence them is an important benefit that hasn't always been available to consumers.

"Historically, it's been more of a pull of borrowers going out and trying to find that information to figure out where they stand, versus a push where their financial institution of choice allows them to see that information on an ongoing basis," Jones said.

In addition to credit card providers, traditional credit-scoring companies like FICO have come under fire in recent years for lack of transparency into how models are developed and the results they produce — further excluding underserved communities from accessing mainstream credit products. 

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This criticism from consumer advocates and fintech lenders has driven FICO to work on incorporating alternative data sources into scoring models as a way of reaching underrepresented populations.

Firms like VantageScore Solutions, which was created as a joint venture by Equifax, Experian and TransUnion, seek to provide the industry with a "more inclusive" model not developed based on "what people looked like in the '80s and '90s," said Rikard Bandebo, executive vice president and chief product officer for VantageScore Solutions. 

Bandebo explained that alongside the significant changes made between iterations of VantageScore's models, the firm will release data explaining how the new model differs from the old to educate lenders on how it generates scores.

"I'm not going to say what is right or what is wrong, per se, but what I will say is that … we have a lot more flexibility to make bigger changes between each model," Bandebo said.

While providing free credit score information to members is valuable for increasing engagement, the insights extend deeper into consumer behavior and can ultimately help better understand the needs across all score brackets.

"If the consumer gets financial education and wellness, guidance, goals and personalization of loan products all for free, why would they want to opt out?" said JB Orecchia, chief executive of SavvyMoney.