Experian and Paylink launch debt consolidation tool

Experian, the credit reporting giant, has announced a strategic partnership with Paylink Solutions, a leading provider of affordability software and payment services, to tackle the significant challenges surrounding debt consolidation loans. This collaboration aims to expand credit access and promote financial inclusion by leveraging Paylink’s pioneering ReFi™ product, which will be integrated into the Experian Marketplace.

The demand for debt consolidation loans has surged, particularly as the cost-of-living crisis deepens, pushing many households into financial difficulties. Debt consolidation remains the primary reason consumers seek loans on the Experian Marketplace. However, affordability restrictions have hindered many individuals from qualifying for these loans. According to recent Experian data, only 37% of debt consolidation loan applications receive pre-approval on their marketplace, compared to 59% for credit card applications. This disparity highlights a significant gap in the market, driving more than 3 million people towards unlicensed lenders or loan sharks, and over 10 million to borrow from friends and family.

Currently, lenders face a structural challenge: they are unable to directly settle customers’ existing debts when issuing a debt consolidation loan. Instead, they rely on borrowers to use the loan funds appropriately, a practice fraught with risks. Lenders must factor in both the new loan and the existing debts during the underwriting process, often leading to loan applications being deemed unaffordable. Furthermore, there is no guarantee that borrowers will use the new loan to clear their existing arrears, potentially exacerbating their debt situation.

The partnership between Experian and Paylink aims to address these challenges by streamlining the debt consolidation process. Paylink’s ReFi™ product allows for the direct settlement of existing credit commitments through the Experian Marketplace. By consolidating various forms of debt—such as credit cards, personal loans, retail credit, and overdrafts—into a single, more manageable loan with improved terms, ReFi™ promises to simplify payment management, reduce monthly costs, and mitigate the risk of further debt accumulation.

Eduardo Castro, Managing Director of Experian Consumer Services, underscores the importance of this initiative: “As people continue trying to get on top of their finances amid the increased cost of living, our aim is to remove any barriers that will prevent them from doing so. Our new partnership with Paylink will allow us to unlock access to credit for more consumers seeking to simplify the process of managing their debt.”

Jake Ranson, CEO of Paylink, echoes this sentiment, highlighting the transformative potential of ReFi™: “Against the backdrop of a prolonged cost of living crisis, ReFi™ has already proved its value to thousands of customers who, by shifting legacy debts to a new more affordable loan, have transformed their monthly household budgets. ReFi™ enables a financial ‘reset,’ potentially leading to significant savings and quicker debt repayment.”

This collaboration is not only poised to benefit consumers but also offers substantial advantages to lenders. By ensuring that new loans are affordable and explicitly used to clear existing debts, lenders can reduce financial risk while expanding their customer base. “The benefit of this partnership is twofold,” notes Eduardo Castro. “The ReFi™ solution offers a valuable tool for lenders to expand their offerings and reach a broader customer base that may have originally been overlooked.”

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