The call to apply for credit is everywhere you look. Interest-free offers, discounts for acting today, and special promotions encouraging you to buy today and pay tomorrow with the swipe of a credit card. The challenge for consumers is that when you are unfamiliar with your credit score and have not examined your credit report, perhaps ever, completing an application in public can create anxiety and discomfort among the very buyers the business wants to attract.
Department store environment. In the department store checkout line, the clerk asks if you want to save an additional 10% on today’s purchases by applying for the store credit card. You hesitate with a number of potential questions running through your mind. Security, public rejection, and time are all thoughts at the top of the list.
Sales staff requesting credit applications has become part of our culture, and a common occurrence in many retail settings. You want to save money, and may have an interest in obtaining the additional discounts and benefits offered from a store you frequent, yet, the overall approach creates hesitancy and resistance.
Retail department store applications require customers to disclose personal information in a public environment, potentially surrounded by strangers. You hold up the line while completing the process, sometimes getting angry stares from customers in line who are in a bigger hurry than you were when you agreed to complete the application. The clerk must now ask detailed personal information, which you try to whisper, so others do not hear. At best, providing your birth date a social security number makes you uncomfortable, at worst it puts your private data at risk of identity theft.
High ticket priced retail stores. Stores selling higher ticket items such as technology, furniture, appliances, and home improvement products encourage the use of store credit cards by promoting interest deferred promotions of zero percent interest for several months or even a few years when you meet spending thresholds. The companies typically have a place where you can complete a paper application at a service desk separate from a regular checkout line. In these cases, the process can take longer as the employee must then re-key your information into a system and wait for a decision. The process might take up to an hour before you can complete the purchase transaction.
Auto Dealerships are among the most dreaded by customers. You need a car, but do not want the high-pressure sales to purchase a certain model car, nor the dreaded sales pressure when completing the financial paperwork. Comparing finance options and terms while at the dealership is non-existent. The auto sales staff offers the convenience of leaving with the car but not necessarily under the best terms.
Challenges to the Current Process
A recent survey by Experian demonstrates customer reluctance to apply for credit in public settings. Of the consumers surveyed, 58% expressed concerns about privacy and the handling of their personal information. Another 42% felt the process took too long. Customer responses also addressed customer responses to their levels of discomfort. 12% of survey takers have failed to complete the purchase and walked away from the transaction because of the time commitment. Another 16% left the store without making a purchase because the person ahead of them was completing the credit process.
The survey also revealed that consumers making large purchases such as appliances and vehicles want the option of comparing financing offers and a faster, easier credit application process.
Experian’s Real Time Credit Solution
Beginning in the summer of 2017, Experian has a new product to address these customer concerns called Text for Credit™. Now available through select retailers, consumers can complete a credit application directly on a smartphone and have the financing decision before getting in the checkout line. You know exactly the terms, rate, and line of credit without holding up the line or receiving a public rejection. Auto dealerships also offer the service, which provides multiple offers to choose from, before meeting with the finance staff to close the deal.
The process is simple:
When you want to apply for credit, you request a text with a merchant provided code.
The company sends the text reply with a link to a corresponding website. You follow the link to complete the application. Review an instant decision or multiple credit options, and decide to accept or decline available offers.
Smartphone device credentials often allow customers to complete the application without filling in information previously keyed into their devices such as address, birth date, and phone number. The intuitive application can shorten the application process and create a more secure procedure.
When you accept a credit offer, you gain immediate access to the credit line through a scannable barcode directly on your phone.
With nearly all adults in the US using smartphones, this channel has become the preferred method for communication. The seamless process creates a faster, more secure process for obtaining credit in a retail setting.
Considerations Before Applying for New Credit
Adding credit is not a decision made lightly. It can impact your credit score, either positively or negatively, depending on the current credit and activities. New credit can help reestablish damaged credit in the event of past defaults. Store credit cards are often good places to apply when you have derogatory marks on your credit file because they offer more relaxed credit qualifications, but higher interest rates.
Using credit to purchase products during an interest-free or deferred interest promotion will put positive activity on your file without charging interest payments, but only if you pay off balances before the promotion ends. In the case of an interest deferment, failure to repay the full balance before the end of the promotion will result in interest charges from the purchase date.
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a free financial analysis.
Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer.