UK lendtech Zopa brings transparency to credit score calculations
UK-based peer-to-peer (P2P) lending company Zopa has launched its new product ‘Borrowing Power’, which it says is the first time a lender has been transparent about how it determines who to lend to.
Designed to help customers get access to cheaper credit, Zopa says it’s also the first to directly link a credit tool to a lending product.
By “increasing their borrowing power score by one point”, the lendtech says it saves each customer £600 on average over the loan period.
“Giving people certainty, transparency, and ultimately the power to lower the cost of credit in the future is unique in the market,” says Zopa’s chief product officer Didier Baclin. “We are putting the power back into the hands of the customer – allowing people who may not be eligible for credit, or those who want a lower rate, to take action and unlock a lower rate in the future.”
Baclin says his company wants “to take away the smoke and mirrors linked to creditworthiness”, sharing Zopa’s survey of 2,000 UK consumers. The survey suggests 29% of the UK’s population don’t understand how to improve their credit score and 45% are unsure how lenders calculate the rate of borrowing.
Zopa’s free new product gives people a borrowing power score between one and ten, and breaks down specific actions that can help them to improve it. Determinable credit score factors include credit score data, credit utilisation, credit limits, hard searches and affordability based on personal circumstances.
Consumers using Zopa can also see the potential price of a loan if they improve their score by a set amount.