Credit Freezes and Lending: Navigating the New Normal

In today's digital age, consumers are increasingly conscious of their credit security. Credit freezes and locks have become popular tools for individuals seeking to protect their personal information from fraudsters with the number of consumers choosing to lock or freeze their credit growing by 3 to 5% each quarter.1 While these measures offer greater security for consumers, they also present a challenge for businesses that rely on accessing credit reports for loan applications, background checks, and account verification.

The Problem: Disruptions to Credit Decisioning Processes

Credit freezes and locks restrict access to an individual's credit report, requiring explicit permission from the consumer to unfreeze or unlock the report. This can lead to significant disruptions in the credit decisioning process for businesses. For instance, a lender may be unable to access a potential borrower's credit report, delaying the loan approval process and potentially causing the applicant to become frustrated and abandon the application altogether. 

These disruptions can result in various negative consequences for businesses, including:

• Lost revenue: Delays in credit decisions can lead to missed business opportunities and lost revenue. In fact, 48% of consumers who experienced digital friction took their business to another bank altogether. 

• Increased operational costs: Manual workarounds to manage credit freezes and locks can increase administrative costs and burden staff.

• Reduced customer satisfaction: Delays and friction in the application process can lead to negative customer experiences and damage brand reputation.

Impacting the Entire Ecosystem

The challenges posed by credit freezes and locks are not limited to a single consumer, organization, or industry. If the consumer abandons the loan process of one lender due to friction, they likely will turn to another who doesn’t have these same roadblocks, causing organizations to lose out on valuable business. Organizations across a range of sectors are experiencing the impact of these security measures. Some of the industries most affected include:

• Financial services: Banks, credit unions, and other financial institutions rely heavily on credit reports for onboarding new customers, approving loans, and managing risk. Credit freezes and locks can significantly impede these processes.

• Communications and utilities: Telecommunications companies and utility providers often require credit checks for new service applications. Credit freezes and locks can create delays and obstacles in this process.

• Automotive: Auto dealerships rely on credit reports to assess the creditworthiness of potential car buyers and determine financing options. Credit freezes and locks can hinder the auto loan application process.

Introducing Allow Access: A Solution for the Age of Credit Freezes and Locks

As credit freezes and locks become increasingly prevalent, businesses need a solution that enables them to access credit reports efficiently while respecting consumer privacy and security and integrating seamlessly into existing systems and processes. 

Allow Access is an innovative solution designed to address the challenges posed by credit freezes and locks. It enables businesses to seamlessly integrate the process of obtaining consumer consent to access their credit report directly within their existing online applications.

With Allow Access, businesses can:

• Reduce friction: Streamline the process of obtaining consumer consent, reducing delays and improving conversion rates.

• Improve customer experience: Provide a seamless and user-friendly experience for consumers, enhancing satisfaction and loyalty.

• Increase efficiency: Access credit reports quickly and efficiently, enabling faster decision-making and improved productivity and access to credit for the consumer.

Allow Access is a valuable tool for businesses across various industries seeking to navigate the challenges of credit freezes and locks, helping businesses to maintain operational efficiency while enhancing customer satisfaction. 

Ready to streamline? Learn more about Allow Access.

Source:

1. Credit Lock and Freeze Internal Report. Unpublished internal report, Equifax