TransUnion Global Study Finds More Than Half of U.S. Consumers Use Credit Monitoring to Open New Credit Accounts

CHICAGO, Jan. 31, 2024 (GLOBE NEWSWIRE) -- More than 100 million U.S. consumers enrolled in a service to monitor their credit data from TransUnion (NYSE: TRU) between the start of 2018 and September 2023. A new TransUnion found that the motivations of consumers monitoring their credit differ, with the majority of Americans doing so with a near-term goal of opening a new credit account (55%). Three in 10 U.S. consumers (30%) monitor their credit to better manage their debt levels, while 15% seek to improve their credit scores.

To better understand the distinct profiles, motivations and future outcomes of credit monitoring consumers, TransUnion conducted a examining credit behaviors for millions of consumers in both developed and developing markets, including the United States, Brazil, Canada, Chile, Colombia, Dominican Republic, Guatemala, Hong Kong, India, Philippines, South Africa and United Kingdom.

To further identify how these benefits advance credit education and enable financial inclusion, the study used depersonalized credit data to analyze these outcomes for key consumer credit segments: new-to-credit, underserved, and credit served consumers.

“Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fueled by the impact of the pandemic on consumer finances and the heightened familiarity among consumers of becoming victims of credit fraud,” said Charlie Wise, co-author of the study and head of global research and consulting at TransUnion. “Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience. These benefits are shown to lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”

In the U.S., 86% of surveyed consumers stated that it is at least moderately important to monitor their credit, with three in 10 saying it’s extremely important. More than half of consumers (58%) report monitoring their credit at least once per month, with 22% and 10% checking weekly and daily, respectively.

TransUnion surveyed consumers to understand their initial intent to sign up for credit monitoring services, and the actual benefits they have experienced in doing so. The most common reasons U.S. consumers initially signed up for credit monitoring services were that it was free (35%), to improve their credit score (32%), and to monitor their report for accuracy (31%).

Additionally, after using monitoring services for some time, consumers reported added benefits that credit monitoring has allowed them to achieve: gain visibility to changes on their credit report (42%), learn how to manage their credit score (41%), detect fraud (39%), and pay down debt (24%).

The study further identified three distinct segments of credit monitoring consumers based on their primary motivation for monitoring their credit. These included Credit Seekers, Credit Managers and Credit Improvers.

Credit Seekers Benefit from Attaining New Credit

More than half of the credit monitoring population (55%) is doing so with a goal of attaining new credit. Credit Seekers are consumers with near prime and above credit scores who monitor their credit with the intention of opening new credit accounts in the near future. When comparing Credit Seekers who monitor their credit to those that do not, credit monitoring consumers open 1.16x more credit accounts, such as credit cards and auto loans, over the following year.

Both New-to-Credit (NTC) consumers – those early in their credit journeys – and underserved consumers – those less engaged in the credit market overall – also saw similar higher activity for the credit monitoring segment. NTC consumers who monitor their credit display 1.21x higher origination rates for any credit product than those who do not monitor their credit, and for underserved it is 1.24x. Served consumers, those with established credit histories and readily available access to credit, saw an 1.14x higher rate of opening new accounts. “For new-to-credit and underserved consumers, who typically have a more difficult time expanding their credit wallets, credit monitoring can be a crucial enabler of greater credit education and access,” said Wise.

^{* Non-monitoring consumers were analyzed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services}

Credit Managers Benefit from Paying Down Debt and Detecting Fraud

As debt levels have risen to near-record levels in recent years, the study found that many U.S. consumers (30%) monitor their credit with the intention of keeping an eye on their overall balances. Credit Managers are defined as consumers with near prime and above credit scores who generally monitor their credit with the goal of reducing or maintaining their balances or monitoring for fraud.

When surveyed, 24% of all U.S. credit monitoring consumers said they were able to pay down debt as a result of credit monitoring. In alignment, the study found that Credit Managers decreased their overall balances by an average of 11% within a year after starting monitoring. “Though we are in a high-interest rate environment with consumer credit balances at near-record levels, it’s reassuring to see so many Americans taking the initiative to ensure they are paying down or managing their debt levels,” added Wise.

Another primary motivation reported by Credit Managers is protecting against fraud. Four in 10 U.S. consumers (42%) reported that they continue to utilize credit monitoring services over time in order to detect and protect against fraud. This benefit is of increased importance to consumers in light of the continued rise in that has been observed since the onset of the COVID pandemic.

Credit Improvers Benefit from Improving Scores and Staying Current on Obligations

Credit Improvers, which make up 15% of the U.S. credit monitoring population, are defined as consumers with subprime (poor) credit scores who likely use credit monitoring to understand their current credit situations and take steps to improve their credit scores.

The study found that Credit Improvers in the U.S. generally experienced credit score improvements by an average of 28 points one year after they started monitoring their credit. The improvement was even better, at 35 points, for NTC consumers. In both instances, the improvement was better than a comparison set of consumers who do not monitor their credit (average 23-point improvements for both overall population and NTC consumers).

^{* Non-monitoring consumers were analyzed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services}

“While Credit Improvers make up the smallest segment of credit monitoring consumers in the U.S., they also tend to see some of the most impactful benefits in terms of credit improvement,” said Lindsey Downing, head of TransUnion’s Consumer Interactive business. “It’s a clear indication that those consumers who are actively looking to improve their credit health may achieve better results if they monitor their credit and are able to plan their steps and track their progress.”

Free Credit Monitoring Benefits Consumers and Lenders

In an effort to help more consumers easily access their credit scores, many financial institutions are offering free credit monitoring tools. This easy access not only helps consumers, but enables lenders to build stronger relationships with their customers.

Over one-third of U.S. consumers (35%) said they initially signed up for credit monitoring because it was free. One in three of these customers (32%) stated they would prefer the lender providing free credit monitoring services over other lenders when opening new products; and 21% said they would prioritize that lender’s payments over other lenders’ payments.

“Consumers now expect financial institutions to offer free credit monitoring services, as it allows them to improve their credit profiles, better manage existing credit, and seek new credit in the future. Offering such services clearly benefits financial institutions as many of their customers are more likely to remain loyal to them for future credit activity,” concluded Downing.

For more information about TransUnion’s global credit monitoring study, . Consumers interested in obtaining their TransUnion credit report, credit score, and accessing additional credit planning tools can . Businesses interested in enabling consumers to better manage their credit health, protect their identities and control their financial futures can visit TransUnion’s TruEmpower™ solution line .

About TransUnion (NYSE: TRU) 

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good^® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.