UK-based financial services marketplace ClearScore has unveiled a new product that uses “first-of-its-kind” automated debt repayment technology to repay a borrower’s existing debts when they take out a debt consolidation loan.
The new product, which is called ‘Clearer’, is available to all ClearScore’s directly integrated loan partners.
It works by linking a debt consolidation loan provider directly with a ClearScore user’s existing debt provider or providers, such as credit card, personal loan and car finance companies.
So that the borrower ends up with one monthly repayment, the funds from the debt consolidation loan go automatically from the loan provider to repay the existing debts, bypassing the borrower altogether, according to ClearScore.
Andy Sleigh, UK chief executive officer of ClearScore, said: “Traditional debt consolidation solutions come with inherent risk attached that borrowers may not choose to use funds to repay existing debt, but our automated repayment solution negates that risk and diverts funds directly to the existing lenders.
“This is a win-win for borrowers and lenders, whereby the reduced risk for lenders means they can charge lower interest rates, saving borrowers money in the long run.”
The first of ClearScore’s partners to sign up to provide debt consolidation loans is UK-based credit technology platform Abound.
Abound provides personalised loans based on income and spending patterns, using ClearScore’s Open Banking technology stack to help it assess credit risk and affordability.
“The combination of ClearScore’s automated debt repayment technology and Abound’s AI-led technology make it easier for borrowers to manage their debts and reduce the risk of them staying in debt for longer,” added Gerald Chappell, Abound’s co-founder and chief executive officer.
“We look forward to working with ClearScore as this consumer-focused technology initiative has the potential to make a huge impact on debt consolidation and management.”
Abound is the consumer arm of Fintern, which also owns Render, the proprietary technology being used by Abound to deliver “smart” loans.
Last month, ClearScore Group launched in New Zealand, offering a free credit report data app and website to enable “informed” financial decisions.
The move followed its expansion into South Africa in 2017, Australia in 2020 and Canada in 2022.