24 September 2010

An Old Flame Gets Me Excited...About Credit Scores

I received an email from an old flame a few weeks ago that really got me excited. "Umm...Matt," I'm sure you're thinking. "Your wife may be reading this blog. Perhaps there's a better venue for this post?"

If so, that's an excellent observation...save these two important points: 1) There's a better chance of me wearing a Lady Gaga meat dress than my wife reading my blog; and 2) The old flame I'm referring to is the company CreditKarma.

Several years ago, OpenSourceCU brought my attention to an internet startup company called CreditKarma. The site was great, offering free credit scores to consumers within minutes of signing up. You also received a ton of tools to help you understand what your score means, how it compares to your peers, and how you can improve upon it. The catch was really no catch at all. Based on your credit score, CreditKarma displayed affiliate financial services advertisements for which you qualified.

Theretofore, it had always frustrated me that credit scores, which were so vital to consumers' financial lives, were so hard (and expensive) to get and understand. I loved CreditKarma, and wanted my credit union to embrace it. Alas, it was extremely difficult to make the case that sending members to a site that cross sells competitor products and services was a brilliant business move for our credit union (I still argue that it's our duty as credit unions to get this information to members as affordably as possible, that we should want our members to get the best deal possible no matter who it's from, and that this model works for Progessive Insurance...but I wasn't going to win that argument.)

That's why I was so excited about CreditKarma's email. After spending some time kicking the tires of their new white label service, and talking with CreditKarma staff, I think it's time for credit unions to give them another look.

Here's why:

  1. They've grown. CreditKarma now serves over 2 million members. Credit unions can display ads with either CPM or CPC pricing basis to market to members and potential members based on zip code, credit score, and other data. Until credit unions embrace this service, these 2 million members will see only ads from big banks. Now is a great time for credit unions to compete for their business.
  2. They're all yours. With the launch of their new while label offering, credit unions are able to provide members with credit score information, various credit score analyses, and targeted offers based on credit worthiness without directing them to competing services.
  3. They can help you create a stronger borrower base. The quality of your loan portfolio depends on helping members improve their scores. It's always bothered me when credit unions spend more time and effort trying to attract new members than they do developing and deepening their relationships with existing members. You could spend a fortune marketing outside your credit union to attract high quality borrowers. I'd suggest that spending those dollars on improving members' credit profiles makes more sense.
I had the opportunity to interview CreditKarma CEO, Kenneth Lin for the CU Water Cooler's Liquid Lunch radio show Monday (check it out here), on the heels of a successful launch of their service at UW Credit Union. (Jim Bruene wrote an excellent review at Netbanker.com, by the way). One thing that we didn't get enough time to discuss, however, is something that I've always wondered about concerning innovative services like CreditKarma in the credit union space. Why have we been so slow to adopt such programs? What can innovative startups do to better reach out to credit union decision-makers? What's the biggest stumbling block that keeps credit unions from greenlighting these partnerships?

If credit unions want to remain competitive in an evolving marketplace, we need to do a better job of seeking out innovative services. This doesn't mean purchasing every new idea that comes along (or any of them), it simply means exploring them, evaluating their impact on your members, and deciding whether or not there's a business case for your credit union to adopt them.

(Personal note: I don't do paid product reviews on this blog. Never have, and never will. I wrote about CreditKarma because I like the service, and believe it can help credit unions.)


Southern Cheesehead said...

I think sometimes we don't look into these services because we don't take the time to do it so we don't know about them. Thanks to people like you for bringing things like this to our attention. Some of us marketing people wear so many hats and have so much on a to do list that never gets done that researching new products, etc. gets put on the back burner. Thank you for always challenging us in CU marketing land to be better!!

Jeff Hardin said...

Matt: I go to CreditKarma regularly to check my score, and have learned a lot from them about how my score is put together.

It is a shame that credit unions have not looked into this as a way to help their members (and their cooperatives) as you describe.

It is ridiculously immoral that people should have to pay to obtain their credit score (and don't get me started about people "buying" their free credit reports from singers driving beaters and wearing pirate hats ...).

CJ said...


Agreed, but you have to admit... great ads. Every time I do a credit score presentation, those ads come up and I have to explain that it's not really free.