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Maximizing Opportunities Among Underserved Credit Consumers

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Identity and fraud tools can help lenders meet important financial inclusion goals


A third of the US population — skewed toward Millennials and Gen Zers — intends to apply for new or refinance existing credit in 2024. TransUnion’s Q4 2023 Consumer Pulse Study revealed the reason: While 88% of US consumers believed credit and lending products are important, only 58% believed they have sufficient access.

Plan to apply for new credit or refinance existing credit within the next year


This pent-up demand for credit represents a significant opportunity for lenders, especially those that can reach the 37 million creditworthy Americans who are currently underserved (or entirely unserved) when it comes to credit products. According to TransUnion’s Empowering Credit Inclusion report, many of these consumers have some credit history but currently hold no more than two open credit accounts.

Newly served credit customers show unexpectedly high performance

While most credit underserved and unserved consumers stay that way, the 24% who become fully served each year can turn into valuable customers for lenders. Research shows the newly served demonstrate overall positive payment performance with comparable — and sometimes better — vintage delinquencies on new originations compared to consumers with established credit histories. 


Use external data to help reduce risk while meeting financial inclusion goals

While many credit underserved consumers have low credit scores, alternative data sources that reflect behavior and activity on non-credit accounts can enhance a lender’s ability to assess their creditworthiness. For example, rent payment reporting enables about 9% of unscorable consumers to become scoreable — with an average near prime credit score of 631.

By leveraging trended credit data plus alternative data, lenders can better understand which consumers meet their risk parameters and more confidently extend credit — opening the door for greater access to financial products.


Reduce application abandonment and fraud risk

The Q4 2023 Consumer Pulse Study revealed frustration with the application process (20%) and identity verification failures (15%) were 2 of the top 10 reasons why consumers abandon credit applications. 

Reasons for abandoning application for new credit or refinance


These hurdles may be overcome with identity and fraud solutions that automatically assess a user’s identity and fraud risk during the application process. Lenders may get more business by differentiating legitimate consumers from potentially risky ones through friction-right experiences that don’t turn good customers away.

A lender’s first line of defense is to identify suspicious devices through a process known as device proofing. Sophisticated cybercriminals use mobile emulators to hack victims' cell phones, access device identifiers, and spoof GPS locations and bots to complete application forms automatically — giving the appearance they’re legitimate customers.

Device Proofing uses layered insights about device history and reputation, device-to-identity linkages and user behavior to accelerate application approvals for good customers, reduce false declines and minimize the need for manual reviews.

Identity Verification is another powerful solution that welcomes new customers (anonymous users) with high confidence in their identities. During the application process, the solution helps lenders instantly confirm the authenticity of consumer-provided information against credit, public and device datasets. This approach helps distinguish legitimate users from suspected fraudsters, even if identity elements have changed.

Benefit from the coming surge of new credit applications

With the right identity and fraud solutions in place, lenders are more likely to benefit from the coming surge of new business expected from younger, credit underserved consumers.

By helping these consumers expand their access to credit, lenders can put themselves in a great position to build long-term loyalty and profitable relationships. Further, providing underserved consumers with access to products and tools that help them be successful leads to greater financial mobility and a better quality of life for more people.

Do you have questions? Our team is ready to help.