Your credit score can be decisive in whether or not you are permitted to take out a loan or get a new credit card, and also affects the interest rates you pay on them. But until recently they were difficult to get hold of unless you were willing to stump up a fee. Experian’s Credit Expert, for instance, lets consumers see their score for 30 days before signing up for a not-inconsiderable £14.99 per month.
But last year along came ClearScore, with a plan to give the incumbents a kicking and help people access their data for free. Its CEO Justin Basini, former marketing boss at the payments company Zapp, launched the company alongside Dan Cobley, who used to run Google in the UK.
Rather than charging the consumer to get their credit report, ClearScore makes its money by promoting loans and credit cards that are suited to certain customers’ needs. ‘About 5-10% of people who come to ClearScore are actively in the market for a credit card or a loan or a mortgage,’ Basini tells MT. ‘When they come to the site... I can offer them products that I know they’re very likely to get accepted for and work out how much they might save.’
ClearScore doesn’t actually compile its own credit reports, instead buying the data it provides from Experian rival Equifax. That made getting off the ground an expensive task. ‘We brought in £10m start-up capital into the business, that’s quite a large initial round,’ says Basini. ‘I knew that we needed to move very quickly and I wanted to invest a significant amount in marketing to be able to get a good base of people. And I needed to be able to do a big deal with the credit reference agencies to be able to buy the data at a good price.’
Raising that kind of cash is ‘always challenging’ he admits, but with a background in tech start-ups Basini was fortunate in having experience of doing it all before and a book full of contacts. ‘The second thing that makes it easier is we are following in the footsteps of a proven market that’s developed in the US,’ he adds.
One year from launch and it’s clear things have taken off. He’s not willing to disclose financials but Basini says ClearScore now has 2.2 million users signed up, hundreds of thousands of which have bought loans or credit cards through the platform. As of last week its website is now the most visited of any credit scoring company in the UK.
ClearScore has a growing workforce of around 43, but Basini says recruiting talent hasn’t been a walk in the park. ‘It has been very difficult and it’s one of my major concerns about the decisions the country has made over the last few weeks with Brexit,’ he says – 13 of its workers come from Europe. ‘Recruiting talent is and continues to be a really difficult thing. The reality is if we’re going to come out of Europe then the government needs to give serious thought to how we’re going to train the next generation of software engineers on a mass basis because god we’re going to need it.’
Either way the plan is to reach a headcount of 90 next year, to expand into other financial products and also to look at foreign markets.
And what of the future of credit scoring? There’s much talk of new forms of data revolutionising lending decisions, as number crunchers factor in things like social media use to predict behaviour. ‘I am really excited by the integration of other data sets – whether that’s social media, behavioural data, mobile phone data,’ says Basini. ‘But I think it’s got to be done with the user’s permission, they’ve got to understand why it’s happening.’
Part of the challenge will be finding a way to turn all this new data into information that can actually be used to make decisions. ‘There’s quite a lot to do to work out the signal versus the noise. It can be quite difficult to work out what’s valuable versus what’s not valuable.’