Finding ways to use GPR prepaid card usage data as a tool to help thin- and no-file consumers build credit has been an enticing yet elusive goal for the industry for years. However, the U.S. Treasury has selected Banking Up, a New York City-based GPR card provider formerly known as Plastyc, to work on a project to help determine whether providing consumers with a prepaid card and a secured credit card can improve their access to consumer credit.
Consumers with a sufficient history of responsible spending and saving from continued use of a reloadable prepaid card will be chosen for the project and offered a secured credit card. Participants will have access to a mobile app to help them manage their prepaid and secured credit card accounts, and it also will deliver financial guidance to them via mobile push messages in real time.
Consumers with low to medium income “have limited access to credit, and their prepaid cards cannot help them build or rebuild their FICO score,” says Patrice Peyret, CEO at Banking Up, a 2014 Paybefore Awards Consumer Champion winner. “By offering the option of a secured credit card, we will put a second card in those consumers’ wallets with which they can start establishing a credit score.”
The project uses funds cardholders have saved to a prepaid card savings account feature as the security deposit for the credit card. Up to a thousand participants who have used a prepaid card for a sufficient amount of time and have been able to save enough money to build up a security deposit of $250 to $300 will be chosen, Peyret tells Paybefore.
Goals of the project, which runs to March 2016, include identifying which types of active and responsible prepaid card users also can become responsible secure credit card holders; testing how much and what type of transaction data from prepaid cards will help the most in evaluating creditworthiness; and evaluating whether financial guidance delivered to consumers about their card activities can improve their chances of improving their credit scores.
See related stories:
- A Long Road: Using Prepaid Card Data to Build Credit
- GPR Added Features: Are They Moving the Needle?