Two credit unions are piloting a national study with the Filene Research Institute to investigate the establishment and trajectory of a credit score, and to devise effective ways to educate members about credit scores.
The $1 billion, 69-000 member Dupaco Community Credit Union in Dubuque, Iowa, and the $450 million, 38,000-member Del Norte Credit Union in Los Alamos, N.M., are joining with Filene in the project by the Filene’s i3 (Ideas, Innovation, Implementation) program.
“Unveiling some of the initial triggers, both positive and negative, on a credit score could be groundbreaking for consumers who struggle with home and car ownership, rental ability, and even job acquisition,” said George Hofheimer, Filene’s chief research and innovation officer.
“The insight gleaned from this study may give consumers a real step up in the credit game, helping them establish habits that will open the doors to better opportunities and lives.”
To assist with the study, the credit unions are taking creative steps. For example, the Dupaco Great Credit Race will follow the use of a VISA credit card for six months by 20 individuals who have no established FICO score.
The goal of Dupaco Great Credit Race’s is to ascertain key variables that affect the score’s opening growth, said David Klavitter, Dupaco senior vice president of marketing and a member of Filene’s i3 program. Since considerable weight is put on revolving credit for credit score determination, the Great Credit Race has made the use of a credit card the crux of the investigation.
Participants in the study each receive a VISA credit card with a $500 limit and are only told they must make monthly payments in a timely manner and cannot exceed the set limit. On the last day of each month, each credit union will do a soft pull of the credit score via TransUnion. On the 180th day of the race, the individual with the highest score will be deemed the winner and receive $500.
“The irony for people is that it’s difficult to obtain credit without a credit score,” Klavitter said. “In addition to understanding behaviors that affect an individual’s score, the study will provide insights into more effective ways of helping consumers understand money.”
Other i3 credit unions contributing to the project include Elevations CU, Boulder, Colo.; Leaders CU, Jackson, Tenn.; Vancity CU, Vancouver, B.C.; and Xceed Financial CU, El Segundo, Calif. Currency Marketing of Chilliwack, B.C., is providing marketing support and guidance.