According to recently released data from a bankrate.com survey, an astounding 45% of consumers do not know their credit score, and another 32% have never checked their credit report.
In recognition of this startling trend and a renewal of interest in FICO scores resulting from the 2003 FACT Act, BMI Federal Credit Union ($355M, Dublin, OH) launched an innovative, multi-purposed mail marketing campaign to address the issue head on, dubbed “SmartScore.” The first letters were sent in 2006 and SmartScore has been an annual event since that time.
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The “driver” for the SmartScore letters is financial education and was inspired by Filene’s i3 group who developed the original concept of telling credit union members about the impact of credit scores. After the FACT Act was implemented consumers became more aware of the importance of credit reports, but BMI noticed there wasn’t a great deal of explanation about credit scores. They decided to take that next step and explain to members how credit scores affect things like cost of credit, cost of insurance, and chances of employment.
Sharon Custer, President/CEO of BMI notes that the goals are purely service oriented: “At BMI FCU we believe that the SmartScore letter fits perfectly into the credit union philosophy of helping our members be good consumers. We’re really pleased to provide the SmartScore letters to our members each year as a financial literacy initiative. There really isn’t any other goal. The feedback from our members has been extremely positive. They appreciate the effort we have made in keeping them informed.”
It costs BMI approximately $4,000 each year to obtain the credit score information from the reporting bureau. The mailing costs have increased along with the changes in the marketing material. To make sure that they were getting the most return for the added cost of offering this service, BMI paired the letters with marketing materials tailored to the member’s FICO score.
Last year BMI used four different formats for the letters. For example, members in the lower range received a letter that explained how to improve your score and included marketing information on bill consolidation loans and other resources. Members in the highest range received marketing information on products such as mortgages and RV loans.
They’ve also moved the timing of the mailing around a bit since its inception, deciding to delay the 2009 mailing until January 2010. BMI believes this will be a better time to send the letters because this is when members generally start to think about their financial health. They are receiving those “after Christmas” bills and also thinking about income taxes.
Is your credit union offering similar (or different!) financial education services for your members? If so, email me your story! I’ll be sure to share your experience in an upcoming eBrief, article or blog post.