- JPMorgan CEO Jamie Dimon said in an interview with Business Insider in July that the bank was considering ways to reward customers for boosting their credit score, such as offering rewards points or reducing the rate on a loan.
- The ideas are part of a larger effort at the firm’s consumer bank to help customers improve their financial health.
- In the coming months, the firm is likely to begin beta testing several tools to help consumers get more financially fit, according to a person with knowledge of the bank’s plans.
JPMorgan Chase may start rewarding you for having better credit.
The consumer-banking behemoth is considering ways it can reward people for improving their credit scores, according to CEO Jamie Dimon, who shared the initial plans in an interview with Business Insider in late July. The firm would provide incentives, like reducing loan costs, for lifting a score to a certain threshold, Dimon said.
“We might gamify it, but also give you real rewards,” Dimon said. “If you get to 700, 750, we’ll cut your mortgage costs a little bit. If you get to this, we’ll give you actual rewards like you do in credit cards today.”
In the coming months, the bank is likely to start beta testing several tools around the idea of helping consumers improve their financial health, according to a person with knowledge of those plans. It’s unclear whether those would be tied to improving credit scores, financial education, or other things.
A JPMorgan spokeswoman declined to provide more details.
The plans are part of a broader push across the consumer bank run by Gordon Smith to help customers in ways that either educate them about or gently nudge them to improve their financial health. JPMorgan, which has been providing free access to credit scores in a section of its mobile banking app called Credit Journey, also offers simple tips for how to improve scores or dispute information in a credit report.
JPMorgan isn’t alone. Banks have been providing free access to credit scores and reports in recent years, marketing it as a perk to help burnish banking products that look much the same from bank to bank. The idea is that consumers will use the information to improve their credit profile and become more loyal to the bank that helped them.
But as free scores and other efforts to help customers have become widely available, they have lost some of their distinctiveness, according to Greg McBride, a senior financial analyst with Bankrate.com. So it makes sense that banking executives would begin to think about designing more value-added products and services around that. The products Dimon mentioned may be that next step, he said.
It’s also another way for the bank to develop goodwill with customers just as their improving financial health makes them more eligible for other products or more likely to be lured away by other lenders, he said.
“It’s a way to distinguish yourself from the competition and also fend off the competition while becoming further ingrained with consumers of improving credit quality,” he said. “If they didn’t move on this, someone else would have. And if it’s successful, others will follow.”
Lenders have long used credit scores as a key input for decisions around the creditworthiness of a potential customer. That feeds into choices about whether to offer a loan, or what interest rate might be needed for the bank to be compensated for the risk that it might not get paid back. As credit scores improve, the perceived risk declines.
But there hasn’t always been an easy way for consumers to see their scores improving and take advantage of that reduced risk. For years, consumer advocates and financial bloggers counseled consumers to check their credit reports and call their bank to ask for a reduced rate. But that requires individual actions, with the lender’s response depending on factors that aren’t always clear to the borrower.
The tools discussed by Dimon or others may take some of those efforts and institutionalize them so that each customer who qualifies may benefit. And in doing so, it could allow the bank to design a technology solution to reduce the friction for its customers.
“There are a lot of things to do that we can actually do better,” Dimon said in the July interview. “We have people devoted just to trying to do that.”
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