ClearScore, one of the UK’s leading financial services marketplaces, today announced the launch of ‘Clearer’, a product that automatically repays people’s existing debt when taking out a debt consolidation loan.
The first-of-its-kind technology behind Clearer ensures that funds for debt consolidation go directly to paying off debt, thereby ensuring better outcomes for borrowers. Automated debt repayment also reduces risk for the lender, resulting in greater likelihood of being accepted and lower rates for borrowers.
Clearer works by linking a debt consolidation loan provider directly with a ClearScore user’s existing debt provider(s), which would typically be credit card, personal loan and car finance companies. The funds from the debt consolidation loan go automatically from the loan provider to repay the existing debts, bypassing the borrower altogether. The net result is that the borrower ends up with one manageable monthly repayment, saving money over the term of the loan, and making finances clearer, calmer and easier to understand.
By utilising ClearScore’s technology, lenders can align with the imminent Financial Conduct Authority’s (FCA) Consumer Duty requirements, scheduled to come into effect on 31 July 2023, ensuring customers consistently receive suitable products that yield positive outcomes. Lenders also benefit from more accurate affordability assessments which can boost volumes significantly and reduce credit risk.
Andy Sleigh, UK CEO at ClearScore, said: “ClearScore’s new integrated debt repayment technology ensures that borrowers can tackle their outstanding debts with confidence, knowing that they can reduce their overall monthly outgoings. Traditional debt consolidation solutions come with inherent risk attached that borrowers may not choose to use funds to repay existing debt, but our automated repayment solution negates that risk and diverts funds directly to the existing lenders. This is a win-win for borrowers and lenders, whereby the reduced risk for lenders means they can charge lower interest rates, saving borrowers money in the long run.”
ClearScore’s Clearer product is available to all ClearScore’s directly integrated loan partners, the first of which to sign up to provide debt consolidation loans is Abound, the UK credit technology platform. Abound provides personalised loans based on income and spending patterns, whereas most loans providers only consider credit score as a basis on which to assess suitability to lend. Abound therefore takes a more rounded view of credit risk and affordability based on Open Banking technology. Abound is one of a small but growing number of credit providers in the UK to include Open Banking data in its underwriting process and that data is powered by ClearScore’s leading Open Banking technology stack.
Gerald Chappell, CEO and Co-founder of Abound, said: “We’re very proud to join ClearScore on its journey to make paying off debt as easy as possible. The combination of ClearScore’s automated debt repayment technology and Abound’s AI-led technology make it easier for borrowers to manage their debts and reduce the risk of them staying in debt for longer. We look forward to working with ClearScore as this consumer-focussed technology initiative has the potential to make a huge impact on debt consolidation and management.”