How important is financial literacy and education for people trying to navigate thorough today’s world of credit and commerce? To dive into this subject, Digital Journal caught up with Rod Griffin, Experian’s Senior Director of Public Education and Advocacy.
Digital Journal: Why is financial inclusion important in today’s society?
Rod Griffin: Every consumer deserves the opportunity to achieve their financial and life goals. That could be taking out a student loan, renting an apartment, purchasing a car or buying a house. Unfortunately, far too many consumers have been excluded from the mainstream financial system. To make matters worse, the pandemic disproportionately impacted underserved and low-income communities, many of these individuals are still struggling to find jobs.
That’s why access to fair and affordable credit is so important. It helps level the playing field, especially for disadvantaged and underserved communities. Without it, low-income communities will be subject to high-interest loans and be caught in a perpetual financially destructive cycle. At Experian, our entire approach is built around breaking that cycle by enabling financial inclusion. Bringing more people into the credit economy, opens up more opportunity for consumers to live their best financial lives and improve their financial well-being.
DJ: What are some of the barriers when it comes to financial inclusion?
Griffin: One of the more significant challenges when it comes financial inclusion are some of the historical inequities related to credit, wealth and health. That history has contributed to the underrepresentation of disadvantaged communities in the mainstream financial system. Many of these individuals have limited-to-no credit history despite making timely payments for rent, utilities, mobile phones, etc. You need to have credit to get credit. That’s why Experian has long supported the use of new sources of data, such as on-time utilities, telecom and even streaming service payments, to complement current credit history information to help lenders assess the creditworthiness of more consumers.
Griffin: Beyond more data in the system, there’s a lack of trust in the mainstream financial system from disadvantaged communities. These consumers have been excluded and unrecognized by the system for many years. It’s important to earn that trust. We can do so by partnering with organizations that understand the day-to-day struggles of these communities, and engage with them on a more personal level.
DJ: Why is financial education a critical part of this?
Griffin: Lack of knowledge about how to navigate the mainstream financial system has always been a challenge for consumers. Financial literacy leads to financial capability, which then leads to financial inclusion and ultimately financial success. Helping people, particularly those excluded from the mainstream financial system, understand how to make the system work for them, gives them the foundation to build their financial future.
Why is it important that business have a continuous financial education program?
Sometimes organizations view financial education through a “Credit 101” lens or with a one-and-done approach. But the reality is, financial education is a journey—one that begins during our youth and extends through adulthood.
Every consumer enters the financial lifecycle at different stages of readiness, so it’s important to meet them where they are, with information they need, when they need it and are open to receiving it. As an industry, our education programs need to resonate with everyone from young children to adults during life’s teachable moments—whether that’s saving for college or buying a home.
DJ: Can you share some of the initiatives being done at Experian to make sure more people have financial access?
Griffin: At Experian, we have a strong commitment to help broaden access to fair and affordable credit for consumers. In fact, a little more than two years ago, we launched Experian Boost, enabling consumers to add positive payment history directly into their Experian credit report. To date, more than 8 million consumers have added over 50 million cumulative points to their FICO Scores across the U.S.
In addition to Experian Boost, we’ve long partnered with organizations, such as the Jump$tart Coalition for Personal Financial Literacy and Operation HOPE, among others, to deliver tools and resources to uplift and educate consumers, equipping them with credit management best practices and helping them understand the credit scoring process.