LiveLend, a unit of Chetwood Financial, has rolled out dynamic loan that slashes interest rate as borrowers’ improve their credit score.
Claimed to be the world’s first, the LiveLend Reward Loan utilises data provided by ClearScore to monitor credit score of the borrower.
With every 25 point improvement in the credit score, the interest rate will be reduced by 2%. The rate cuts will be revised every three months.
Additionally, the interest rate will never increase, even if the credit score of the borrower worsens.
The LiveLend Reward Loan service aims to provide an additional opportunity to the customers save money and strengthen their credit score, if they complete their repayments on time.
LiveLend head of customer Julia McColl said: “Many ordinary borrowers don’t qualify for the headline rates that are plastered in bank windows. You’ll either be offered a far worse rate or be rejected outright. And when you’re accepted for a loan you’re viewed as the same person for the entire term, often over many years.
“Our tech changes this, improving your rate as you improve your score, across the lifetime of your loan. This is not only a fairer product, but is designed to help people further improve their financial position through positive nudges and clear incentives.”
After assessing ClearScore data, LiveLend estimates that around 25% of the borrowers will unlock a reward within the first three months under this dynamic loan services.
The British startup added that half of the total borrowers can reduce their interest rates after 12 months.
ClearScore founder and CEO Justin Basini said: “We are really excited to bring this fairer form of credit to our users.
“Our mission has always been to help everyone, no matter what their circumstances, achieve greater financial wellbeing and this innovation will give even more people access to cost-effective credit.”