Extra Cardholders can Increase Credit Scores by an average of 48 points & become 2X More Likely to get an auto loan or a credit card.
Summary
A new study finds that cardholders of Extra experience significant positive benefits after a year of using the financial product. In a comparison of more than 10,000 consumers, the study suggests that Extra cardholders were better able to responsibly achieve their credit goals with the help of the innovative consumer financial product than the average consumers, as well as with individuals who demonstrate healthy credit behavior alone.
During this study was also able to identify what user behavior achieved the best results with Extra. “Successful” Extra cardholders are members who use the product as recommended, have no 30-180 day delinquencies reported in the last 6 months of membership; no trade lines with a maxed out balance ratio >= 100 in the last 3 months of membership; and started their Extra membership with a credit score of 650 or less.
Key Findings
- Extra boosts successful cardholders’ credit scores by up to +99 points, on average. For all Extra customers, the average credit score increase was 20 points during the study period, compared to a 1-point gain in the random group cohort. The most successful Extra cardholders saw an average credit score increase of 48 points during the study with those with a credit score of 500 or less upon signing up for Extra saw an impressive 99-point average credit score gain.
- Extra cardholders are twice as likely to achieve new credit goals than average consumers and more likely to have opened the majority of their credit lines while using Extra. Extra cardholders were more than 2x as likely to take out an auto loan or lease during their Extra Membership than average consumers (26% vs. 12%, respectively), nearly 3x more likely to take out a mortgage (11% vs. 4%), and 1.5x more likely to open a credit card (63% vs. 43%). Overall, most (54%) Extra cardholders opened the majority of their open trades within the last 12 months compared to only 40% of the random sample consumer group.
- Despite opening more accounts, Extra cardholders are less likely to exhibit negative credit outcomes than average consumers. Not only are Extra cardholders more likely to have opened more (and a majority) of their accounts in the past year, they also are more likely to demonstrate positive credit behavior. 77% of successful Extra cardholders had the majority (51% or more) of their trades never delinquent or derogatory, compared to just 45% of those in the random sample cohort. Similarly, 90% of successful Extra cardholders had zero trades where the payment behavior or history is worse in the most recent six months, compared to the six months before that. This cohort also had zero total trades presently 30 days delinquent reported in the last six months.
- Extra cardholders who use the product as recommended, were more likely to achieve and maintain good credit scores than consumers who demonstrated healthy credit behavior alone. Among those in the successful usage segments, which was defined as: no 30-180 days delinquency reported in the last 6 months; no trade lines with balance ratio >= 100 in the last 3 months; and with starting credit score of 650 or less in March 2021, Extra cardholders with a credit score of 600+ saw a 28-point gain over a 12-month period. Contrarily, those in the random sample group with credit scores of 600+ saw a 45-point credit score decrease, on average, despite demonstrating otherwise successful credit behavior.
Conclusion
The Extra Card helps its cardholders build and maintain good credit as part of a healthy credit lifestyle. The study results show that Extra cardholders are more likely to grow their credit, make credit-based purchases, and demonstrate positive credit outcomes than average consumers. It’s further believed that pairing good credit behavior with Extra membership produces the fastest credit growth while continued Extra usage helps those with good credit maintain or even increase credit scores further still.
Background and Methods
Extra commissioned Brandata, a brand measurement consultancy, to analyze a dataset provided by consumer data company, Experian, consisting of more than 2,000 data points across more than 10,000 consumers, which was then further segmented into an Extra cardholder group and a random sample group. The study authors then employed cloud-based machine learning tools and comparative analysis techniques to better understand how to further impact the credit situation and positive credit outcomes of Extra cardholders.
The final cohorts described in this study consisted of 2,107 active Extra cardholders, 1,128 active Extra cardholders who also demonstrated successful credit behavior, 2,943 random sample consumers, and 2,221 random sample consumers who also demonstrated successful credit behavior.
A predictive model for increasing consumer credit scores was also developed in conjunction with the study, which opens the potential for Extra to develop its own proprietary AI-powered credit coaching technology in the future
