Stop Ignoring Imperfect Credit Customers and Start Competing for Them
By Jessica Kendall, , Contributor at The Financial Brand
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Steve Min, Chief Credit Officer at Credit One Bank, has spent his career working in credit risk and portfolio strategy at multiple financial institutions. At Credit One, he oversees lending and product decisions for a customer base that largely falls outside traditional prime segments. His approach centers on expanding access to credit while equipping consumers with the knowledge and tools to improve their financial standing over time.
In a recent Banking Transformed podcast episode, Min argues that serving customers with less-than-perfect credit is both a viable business model and an opportunity that many large banks continue to overlook due to risk aversion and outdated assumptions about profitability.
By combining targeted education, real-time digital tools, and a broader spectrum of rewards and credit products, Credit One demonstrates that institutions can grow portfolios while helping customers build stronger financial momentum.
Need to Know:
- A significant share of the consumer population lacks a strong understanding of how credit scores work, creating both risk and opportunity for banks.
- Institutions that provide education alongside credit products can improve portfolio performance while deepening customer loyalty.
- Expanding product features — such as rewards and travel benefits — to near-prime and subprime segments can drive differentiation and acquisition.
- Risk aversion among large banks continues to leave a sizable and profitable market underserved.
- Helping customers build “financial momentum” is not just a social good; it supports long-term revenue growth and cross-sell potential.
Imperfect Credit as an Opportunity
Many large financial institutions still treat customers with less-than-perfect credit as a segment to avoid rather than a segment to develop. Steve Min believes that mindset leaves substantial growth on the table. Credit One Bank’s business model is built on serving consumers who may not meet prime credit thresholds but still need and want access to mainstream financial products.
Min points out that a sizable portion of the population sits outside traditional prime categories. Rather than viewing that reality as a risk concentration, his team treats it as a structural feature of the market. Consumers experience financial setbacks, job disruptions, and unexpected expenses throughout their lives. Credit profiles often reflect those life events rather than long-term irresponsibility.
For retail banking leaders, this framing shifts the conversation from “should we lend to this segment?” to “how do we build the right controls, pricing, and education to serve it sustainably?”
Key takeaway: Credit One’s portfolio growth illustrates the commercial upside. By expanding outreach and tailoring programs to help consumers build or rebuild credit, the bank has increased both new account volumes and referrals. Min attributes this growth to two forces: ongoing economic pressure on households and deliberate efforts to broaden the bank’s addressable market.
Banks that invest in risk segmentation, adaptive underwriting, and lifecycle management can capture growth that more conservative competitors leave behind.
Education as a Core Product Feature
Min consistently returns to one theme: most consumers do not fully understand how credit works. Internal surveys conducted by his organization found that roughly two-thirds of respondents lacked basic knowledge about how payment history, credit utilization, and account age affect their scores.
To address this gap, Credit One launched programs designed to teach consumers what actions damage their credit and how to avoid them. One initiative, framed around “credit wreckers,” focuses on simple, memorable rules: make payments on time, avoid maxing out available credit, and maintain long-standing accounts to preserve credit history length.
While financial education is not a new concept, many banks still treat it as a compliance checkbox or a static set of website articles. Min’s team treats it as an operational lever that directly affects portfolio performance. Customers who understand how their behavior affects their score are more likely to stay current on payments, manage balances responsibly, and remain engaged with their accounts.
Digital tools reinforce this educational approach. Mobile alerts, automated payments, and real-time visibility into account activity help translate abstract credit concepts into daily behaviors. Instead of simply showing a credit score, the bank provides context and guidance on how specific actions may move that score over time.
Key takeaway: Education should not sit in a separate silo from core banking experiences. When embedded into apps, onboarding flows, and lifecycle messaging, it becomes a driver of both customer success and risk mitigation.
Expand Premium Features Beyond Prime
Another way Credit One differentiates itself is by offering product features traditionally reserved for high-credit score customers. According to Min, the bank has introduced cashback and travel-focused cards with accelerated rewards for customers who would typically be denied access to those benefits by larger issuers.
This product strategy serves two purposes. First, it challenges the assumption that near-prime or subprime customers will accept stripped-down, low-feature products. Second, it enables the bank to compete on experience rather than solely on approval odds.
For consumers, access to rewards and travel perks reinforces a sense of financial normalcy and progress. For the bank, it increases engagement, card usage, and interchange revenue. The model recognizes that aspirational features can motivate responsible behavior and deepen loyalty when paired with appropriate risk controls.
Key takeaway: Product segmentation does not need to mirror traditional credit tiers. Offering differentiated value to customers who are rebuilding credit can strengthen brand perception and create a pathway for those customers to remain with the institution as their financial profile improves.
Build Financial Momentum Through Partnership
Min frequently describes the goal of Credit One’s approach as helping customers build “financial momentum.” The concept reflects a shift from viewing credit as a static snapshot to viewing it as a trajectory that can improve over time with the right tools and guidance.
This perspective influences how the bank communicates with customers. Rather than positioning itself as a gatekeeper, the institution emphasizes partnership and progress. Customers are encouraged to track their credit, understand the long-term impact of missed payments, and take small, consistent steps that compound into stronger financial standing.
The emphasis on momentum also addresses the emotional and psychological aspects of credit. Many consumers feel stigmatized or discouraged when their credit score falls. Institutions that normalize and support credit rebuilding can reduce attrition and improve engagement.
From an operational standpoint, this philosophy aligns customer outcomes with portfolio health. As customers’ scores improve, they become eligible for additional products, lower pricing, and higher limits. This creates natural cross-sell and upsell opportunities while lowering long-term credit risk.
Key takeaway: For banks considering how to future-proof their credit strategies, customer education, digital tooling, and product design should work together to create forward motion. Institutions that treat credit as a journey rather than a one-time approval decision are better positioned to retain customers across life stages and economic cycles.
What Other Banks Can Learn
Credit One’s approach illustrates that serving customers with imperfect credit is not simply a niche specialization. It can be a scalable growth strategy when supported by disciplined underwriting, clear education, and competitive product features.
Many large banks remain hesitant to expand deeper into this segment due to regulatory scrutiny, capital considerations, and legacy risk models. Min acknowledges that risk aversion is a major factor holding institutions back. Yet that same caution creates space for competitors willing to invest in more nuanced segmentation and proactive customer support.
While risk exists in near-prime and subprime lending, institutions should equip themselves to manage that risk more intelligently than they do today. Advances in data analytics, real-time monitoring, and digital engagement make that task more achievable than in previous credit cycles.
