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Helping employees better manage their credit score

employeescredit

With financial wellness taking a more prominent role in employee benefits, it’s important to make sure that your program includes a way for employees to address their credit. Recent surveys show that many working Americans are struggling with their credit and could benefit from learning how it impacts their financial reputation.

The State of Consumer Credit

According to the National Foundation for Credit Counseling (NFCC) 2015 Consumer Financial Literacy Survey, only 48% of U.S. adults ordered or received their credit score in the last 12 months, and only 34% ordered or received their full credit report in that same time period. That means that the majority of Americans are in the dark about the state of their credit.

When you couple that with the fact that many consumers are cash-strapped, the situation becomes dire.

A recent Harris Poll of employees working full-time indicated that:

  •     34% have had trouble meeting monthly household expenses, like rent/mortgage, car payments, cable bills and credit card bills;1
  •     One-third (31%) say that in the past three years they have run short on funds and had to use credit cards to pay some of their monthly expenses (such as phone, cable, utilities, etc.);2 and
  •     47% consistently carry balances on their credit cards, 26% of whom find it difficult to make minimum payments on time.3

The picture that this data paints is a stark one: too many working Americans are relying on credit for their monthly needs, but they aren’t staying on top of their score or report to know how that reliance on credit impacts them.

This doesn’t just hurt their ability to get credit cards and open bank accounts. Other organizations, such as mobile phone companies, insurance companies, landlords, government departments and employers (as you know) use credit scores as a way to evaluate potential customers and employees.

How You Can Help Employees Manage Their Credit

Many consumers don’t review their credit score and report because they simply don’t know how or don’t see the benefit in it. In the NFCC survey referenced above, 43% of respondents who didn’t get their credit score in the past 12 months said that they didn’t know why, how or that they could request their credit score.

If you offer your employees identity protection benefits, that’s a step in the right direction. However, those programs only allow employees to be reactionary when they get an alert that their credit score has been requested.

Proactive tools like Quizzle (which we offer through our financial wellness platform) help employees take control of their credit by giving them a way to pull their score and report and offering information on how their score is calculated, its impact on their lives, and what they can do to improve it.

In addition to improving their productivity and overall financial wellness, helping employees with their credit has an added benefit. By offering your employees tools that help them understand their credit and make it easier for them to get their credit score and report, you’re showing that you’re sympathetic to the challenges that they face outside of work. And that has a positive impact on their job satisfaction and loyalty.

1 Harris Poll on behalf of Purchasing Power of 2,016 working U.S. adults employed full-time, November 19-23, 2015.

2 Harris Poll on behalf of Purchasing Power of 2,105 working U.S. adults employed full-time, March 16-18, 2016.

3 PwC, “Employee Financial Wellness Survey, 2015 Results.”