Why Your Next Best Lending Customers Will Have Lower Credit Scores
By Jessica Kendall, Contributor at The Financial Brand
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For many financial institutions, a lower credit score simply signals risk. For Michael Coleman, Chief Marketing Officer at Credit One Bank, it may signal something else entirely: a customer whose financial story is more complicated than traditional underwriting models can capture.
During a recent conversation on the Banking Transformed podcast, Coleman discussed how Credit One built its business around consumers who are building or rebuilding credit, a segment many institutions hesitate to serve.
Drawing on nearly a decade of experience helping grow one of the nation’s largest credit card issuers, he explained why credit access alone is rarely enough to improve financial outcomes. Education, encouragement, and a deeper understanding of individual circumstances are equally important.
Key takeaways: The discussion explored how specialized risk models can help institutions identify overlooked opportunities, why financial education needs to be delivered differently in today’s media environment, and how empathy can coexist with responsible risk management.
Need to Know:
- Many consumers with damaged credit experienced temporary life events rather than chronic financial mismanagement.
- Specialized underwriting models can identify creditworthy borrowers that traditional approaches often overlook.
- Credit education is most effective when it is integrated into the customer experience rather than treated as a standalone resource.
- Financial institutions must communicate through the channels consumers actually use, including social and video platforms.
- Long-term customer growth often comes from combining credit access, education, and ongoing encouragement.
The Credit Score Doesn’t Tell the Whole Story
Many financial institutions rely heavily on credit scores to determine who qualifies for credit products. While those scores remain an important indicator, Coleman argues they often fail to explain why a consumer arrived at a particular financial situation.
Some consumers have limited credit histories. Others have experienced medical expenses, divorce, unemployment, or other life events that temporarily disrupted their finances. In many cases, those consumers may still have the habits and intent necessary to become successful borrowers.
Credit One has spent years building models designed specifically to evaluate this population. That focus allows the bank to identify opportunities that more generalized underwriting approaches may miss.
Key takeaway: Rather than asking whether a borrower meets a standard threshold, Coleman suggests institutions should ask a different question: what additional context helps us understand this customer’s future potential? Customer segments often appear riskier when organizations lack the tools or data needed to evaluate them properly.
Caveat: Credit Access Requires Education
Coleman believes one of the industry’s longstanding mistakes has been treating credit access and financial education as separate responsibilities.
Many consumers receive their first credit card with little understanding of how credit scores are calculated, how utilization affects borrowing power, or how payment behavior influences future opportunities.
As Coleman noted, society requires extensive training before someone can drive a car, yet many consumers receive access to credit with virtually no preparation. That reality has shaped Credit One’s approach. The bank increasingly focuses on helping card members understand:
- How payment history affects credit scores
- Why credit utilization matters
- How credit reports are built
- Which behaviors support long-term credit growth
- How stronger credit expands future opportunities
Key takeaway: For Coleman, the goal extends beyond helping customers manage a single account. Stronger credit can improve access to housing, auto financing, additional credit products, and other financial opportunities. He describes this progression as creating financial momentum, where responsible credit habits create opportunities that extend throughout a consumer’s financial life.
Making Financial Education Relevant
Credit One is also rethinking how financial education is delivered. Traditional financial education often relies on articles, guides, and static resources. While those materials remain useful, they rarely compete effectively for attention in a media environment dominated by short-form video and social platforms.
Consumers increasingly expect financial guidance to be accessible, engaging, and easy to understand. Educational content that feels disconnected from everyday life often struggles to gain attention.
The challenge is not simply creating educational content. It is creating content that people will actually consume.
Key takeaway: Rather than presenting information in a purely instructional format, the bank uses humor and storytelling to make concepts more memorable. One example is the company’s “Credit Wreckers” campaign, which uses fictional characters to represent behaviors that can damage a consumer’s credit profile. The bank has also expanded educational content into social channels where consumers already spend time.
Growth Starts with Empathy
Serving consumers who are building or rebuilding credit involves greater complexity. Loss expectations are higher. Oversight is more intensive. Product design requires careful balancing of risk and accessibility.
Yet Coleman repeatedly returned to the idea that these consumers should not be reduced to a number. Credit One’s philosophy centers on understanding the circumstances behind a customer’s financial situation and helping them move forward. That perspective influences everything from underwriting decisions to customer communications and educational initiatives.
The approach has helped the bank grow to nearly 20 million accounts, but Coleman suggests the broader opportunity extends beyond any one institution.
Bottom line: As data capabilities improve and AI creates new opportunities for customer evaluation, more institutions may be able to assess risk with greater precision and context. Banks must decide whether they view consumers with lower credit scores as problems to avoid or customers whose potential is worth understanding.
