2022 Credit Study with TransUnion
The background
In 2022, we received data provided by TransUnion. This data was stored in our datalake for further analysis. It allowed us to understand the results that our credit-invisible customers got from using Possible Loans, and learn about their credit-building journey.
Our methodology
The Possible team analyzed Possible Loan customers’ credit reports at multiple times in 2021, to see if a Possible Loan improved their credit.
For customers who took out a loan in August, we looked at their July 2021 report as the “before” picture of their credit.
For customers who took out a loan in December, we looked at their credit in November as the “before” picture.
In order to measure both short- and long-term impacts to credit scores, we evaluated the “final” scores for each population separately in February 2022. People who took out their loan in December would have had 2-3 months to pay the loan off (which qualify as "on-time"), have us report their payments to credit bureaus, and then have that show up at the end of February in their TransUnion score—showing the shorter-term benefits of a Possible Loan. Those with loans from August would have had 6-7 months to pay off before February, to show the long-term benefits.
Our findings
Previously credit invisible customers establish an average credit score of just over 600 after paying off one Possible loan, and over 50% of scores are above 570 after 6 months.
About 87% of customers who didn’t have a credit score established a score of at least 570 immediately after paying off a loan.
Just over 50% of customers who take out and pay off a loan will have a score above 570 around 6 months after paying off a Possible loan.
The average credit score of previously credit-invisible customers is just over 600 immediately after paying off a loan. Six months later, it is about 560.
Conclusion
This data highlights the positive impact of taking out and responsibly paying off a Possible Loan on customers' credit scores. It emphasizes the importance of financial responsibility and its potential benefits in credit building.