This past weekend I started quilting, and discovered that even something as simple as sewing in a straight line isn’t always as easy as it seems. With the help of a guide, I practiced creating steady, even seams — a task that sounds straightforward but proved to be surprisingly challenging. Each time I drifted off course, I’d have to carefully guide myself back, aware that my quilt was only a practice piece. The stakes were low, and if my lines weren’t perfect, there’d be no real harm done. But as I reflected on this, it struck me that going off track in other areas—particularly with credit—carries far more serious consequences.
Financial services have a critical role in supporting customers as they navigate their credit journeys. Circumstances change, and what once looked like a stable financial situation can shift overnight. Unlike the low stakes of my sewing project, veering off track with credit can lead to stress, mounting financial pressure, and life-altering consequences. Yet despite this, many people are expected to simply know how to manage credit, often without any real guidance or support along the way.
Staying on Track Isn’t Always Intuitive:
While sewing my quilt, I realized how easy it was to slip off course, even with a guide. When you’re aiming for precision, the slightest deviation becomes noticeable. This experience mirrors the challenges many people face when using credit: it’s easy to go off track, and once you do, it can be incredibly challenging to correct. The assumption that credit will be intuitive — like having an invisible guide — is as unrealistic as expecting anyone to be able to sew a perfect seam on their first try.
Yet, this is often what we expect of people when they receive credit for the first time. No one sits down to explain the ins and outs of credit use, the impact of missing payments, or the subtle but important differences between various types of credit. Instead, people are often left to figure it out on their own, navigating the intricacies of interest rates, payment timelines, and the long-term effects of their financial decisions. The reality is that credit is a complex tool with high stakes, and without a solid guide, the consequences of going “off track” can have far-reaching impacts.
The Need for Guidance—And the Absence of It:
It is worth reflecting on how unusual this “sink or swim” approach is. Think about how we teach children to drive. Before they’re allowed on the road alone, they undergo months of lessons, practice, and testing. It’s a highly structured process designed to make sure they’re ready for the responsibility of handling a vehicle. The same can be said for other complex tasks, like cooking or learning a sport; we provide guidance, practice, and support to build confidence and knowledge.
When it comes to credit, we rarely provide this level of instruction. There’s an unspoken expectation that once someone signs a credit agreement, they’ll simply “know” how to manage it responsibly. In reality, many people don’t fully understand the long-term impact of credit on their financial health. They don’t know what options might be available if they fall behind on payments or experience a sudden change in circumstances, like a job loss or health crisis. This knowledge gap leaves many customers vulnerable, particularly during times of financial stress.
Circumstances Change, and So Should Support:
When people first take on credit, it’s usually during a period of stability. They pass risk assessments and affordability checks, and both they and the lender are confident that the credit will be manageable. But life can be unpredictable. Circumstances can shift due to any number of factors: health issues, changes in employment, family needs, or economic downturns. When these shifts happen, a person’s financial obligations can start to feel overwhelming, and they may not know what resources are available to help them get back on track.
Unlike the flexibility I had in my quilting practice, where I could re-sew a crooked seam, people facing financial challenges often have no such freedom. Missed payments, compounded with interest and fees, can quickly lead to an escalating situation that feels impossible to fix. And because financial struggles often carry a sense of shame or failure, many people don’t seek help—they try to manage alone, feeling increasingly stressed as their options narrow.
Bridging the Knowledge Gap:
Financial services companies have a unique opportunity to bridge this knowledge gap. They know the products they offer, the options available to customers, and how to help those who are struggling. But often, these solutions are tucked away in policy documents or waiting to be offered only when a customer initiates the conversation. For many people, especially those feeling the weight of financial stress, reaching out can feel intimidating. They may worry about being judged or penalized and are often unaware of the solutions that could ease their situation.
A more proactive approach would make a world of difference here. By actively reaching out to customers, especially those who may be showing early signs of difficulty, financial services organisations can offer reassurance, options, and support. They can take the lead in helping customers understand that they’re not alone, that there are ways to navigate their financial challenges without drastic repercussions.
Responsible Lending: More Than Just the Initial Decision:
Responsible lending has often been viewed as a one-time decision: an assessment of risk and affordability made at the point of lending. Responsible lending is more than a single checkpoint; it’s an ongoing commitment to supporting customers throughout their journey. Real responsibility means being there when customers need help the most.
This kind of responsibility requires embracing the reality that circumstances change. It means recognising that even well-intentioned, financially responsible people can find themselves in challenging situations. By committing to a more holistic, long-term approach to responsible lending, financial services companies can redefine what it means to be a partner to their customers.
Taking Proactive Support to the Next Level:
Imagine if, instead of waiting for customers to fall behind, financial services companies proactively checked in with them. A simple message or call, a genuine “how are things going?” could be enough to open the door for customers to feel comfortable asking for help. In challenging economic times, this kind of support is even more vital. It’s about treating customers as individuals, understanding their unique situations, and showing that the company is there to help.
Taking responsible lending to the next level means shifting from a transactional mindset, or lip service, to one of true partnership. When customers know their financial services provider will stand by them, they’re more likely to reach out early, reducing the risk of severe financial repercussions. It’s a way to build trust and foster loyalty, showing customers that their well-being is genuinely valued.
Conclusion:
In quilting, sewing a straight line requires patience, focus, and a guide to keep on track. Navigating credit is similar but with far higher stakes. When financial services companies take the initiative to support customers, they’re not only helping individuals avoid hardship but also strengthening their own commitment to responsible lending. By embracing this responsibility fully, they can lead the industry in redefining what it means to be a true partner in their customers’ financial journeys.
Discover how Scores4All can empower your team to proactively support customers in need. For a confidential discussion on how we can help you make a real difference, reach out today—we’d love to connect.
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