While financial literacy education is important, it is the direct experience of borrowing that plays the greatest role in learning and leaves the strongest impressions on customers. Home Credit demonstrates in practice that small loans can teach effective financial planning and cash flow management techniques as well as developing accountability for instalments. It is therefore incumbent upon us as a lender to provide the kind of lending experience that, from start to finish, takes full advantage of the moment and teaches the customers everything we can about their loan while instilling a sense of mutual respect and trust.
A key aspect of achieving this is our level of transparency. Our tried-and-tested pricing schemes include multiple components that we take into account, such as the risk profile of the individual borrower, the type of product being purchased, characteristics of the loan (such as size of the principal, maturity and other factors), all of which are critical, especially in countries with under-developed credit registries. These factors are explained to our customers in a number of ways, so they know what we use to assess their applications and, consequently, how they can improve their own borrowing behaviour and credit scores.
This is why we support our financial literacy initiatives with a thorough transparency package that typically includes a number of benchmark-setting propositions.
Lending responsibly at Home Credit
- A Customer Charter defining the relationship between Home Credit and its customers, and outlining our promises and responsibilities to each other
- Pre-contractual information, often called a borrower’s acknowledgement letter, explains every aspect of the specific loan, including payment dates and amounts and any fees
- A written contract with easy-to-understand terms and conditions
- A cooling-off period during which customers can withdraw from an agreement without penalty