Experian Teams With Paylink to Debut Debt Consolidation Solution

Experian has teamed with affordability software/payments firm Paylink to introduce a debt consolidation solution.

The partnership, announced Monday (Sept. 2), leverages Paylink’s ReFi product to expand access to credit for a broader range of consumers through the Experian Marketplace.

“Debt consolidation remains the number one reason consumers search for loans on the Experian Marketplace, however, many individuals who need these loans struggle to qualify due to affordability restrictions,” the company said. “This vacuum often leads to illegal lending practices, and over 3 million people have used an unlicensed lender or loan shark while over 10 million have borrowed from friends and family.”

Lenders, the companies added, can’t directly pay off customers’ debts when they take out a debt consolidation loan, instead trusting customers using the loan funds appropriately.

This complicates the underwriting process, “as it means lenders need to double count both the new loan and existing debts, often resulting in the new loan being deemed ‘unaffordable,’” the companies said.

“If granted, there is a risk that the new loan will not be used to pay off existing arrears and the customer ends up accumulating more debt.”

Paylink and Experian said they’re addressing these challenges by letting customers settle existing credit commitments with lenders via a streamlined process, repaying legacy debts by consolidating them into a new loan with more favorable terms.

“This approach not only simplifies managing payments but also reduces monthly costs and mitigates the risk of accumulating additional debt,” the release added.

The partnership comes as consumers continue to feel economic pressures, with 70% saying their income has not kept up with inflation, according to recent PYMNTS Intelligence research.

“This sentiment is particularly acute among paycheck-to-paycheck consumers, with 77% of those struggling to pay bills reporting their income hasn’t sufficiently offset rising costs,” PYMNTS wrote last month. “Even among those not living paycheck to paycheck, 61% shared this sentiment.”

The research shows that most consumers said prices for food and necessities have risen in the last year, and were most likely to note the increasing cost of fresh meat and produce. Prepackaged products were close behind, with 78% of consumers noticing a higher cost,  followed by prepared foods and household goods, at 77% each.