Health benefits have long been a key component of employee compensation packages. However, in this time of the pandemic, benefits packages have extended to include services revolving around wellness — both health and financial.
Issues related to money, savings, investing and spending can affect employees’ well-being, which in turn affects their performance in the workplace. According to a study conducted by the Society of Human Resources Management (SHRM), 83% of HR professionals reported that personal financial challenges had some degree of impact on overall employee performance. It’s clear that financial health and wellness programs can lead to employees who are happier, less stressed and more productive. As such, fine-tuning the elements of such programs can lead to a dramatic improvement in employee performance.
One of the strongest components of a financial wellness program for employees is a credit monitoring service. The ability to obtain credit has one of the strongest impacts on one’s finances, and individuals have become increasingly curious about understanding the nature of credit. Let’s have a look at why it makes sense to offer your employees credit monitoring services as part of a financial wellness program.
Education and Awareness
Even if some of your employees are not interested in taking out a mortgage, car loan or other personal debt, it’s never a bad idea to present credit monitoring services merely for their educational benefits.
For example, many borrowers are unaware that the information obtained and maintained by the three different credit bureaus may not be the same. Indeed, not all creditors report the same information and as a result, credit scores can vary significantly. This occurs because the process of reporting a consumer’s credit activities to the agencies is completely discretionary and voluntary. Lenders, landlords, utilities companies, local retailers and others decide which information they share with the agencies.
Armed with this knowledge, employees can make positive changes in their financial life. For example, if they notice that a loan or credit card with which they have a stellar payment history does not appear on one or more of their credit reports, they can contact the bureau and ask why. It is possible that an adjustment can be made and in the process, the employee is improving his or her credit score.
Making Improvements and Correcting Errors
Another reason to provide employees with a credit monitoring service is to help them improve their credit by identifying and correcting errors.
A Federal Trade Commission study found that 5% of consumers had errors on one of their three major credit reports; such errors could potentially lead to them paying more for products, such as auto loans and insurance. Some of these errors might be items that are indeed factual and correct — a past credit card account that they closed, for example — but should not be listed. This is because after a certain period of time, items are supposed to be removed from the report.
However, such items could be responsible for contributing to a lower score. For example, a missed payment is a negative hit but is only supposed to stay on a credit report for 18 months. If it is still on there after 18 months, it is improperly contributing to your lower credit score. To a lesser extent, there might be much larger errors, such as a loan in someone else’s name on one of the reports, or there could be fraud.
Employees need to be made aware that it is their responsibility to contact the bureaus to challenge these errors, not your past or present creditors or financial adviser. As their employer, you are helping them take more responsibility over their credit.
Maintaining Privacy and Building Momentum
Because discussions of credit can make many people uncomfortable, it’s important to present credit monitoring as a financial wellness benefit in which the employee maintains 100 percent privacy and security.
Early adopters will find value in the service, and will hopefully spread the good word to your HR and benefits team of the service’s value. When presenting benefits packages to new employees, you can certainly make the credit monitoring service a cornerstone component of our wellness benefits packages.