“Our goal is to catch the consumer at a teachable moment.”
-- Co-founder, KK Srinivasan, 11/17/00

WorthKnowing delivers a product in great demand in the United States: a user-friendly free credit report. A proprietary credit score is displayed on a gauge which also shows typical offers associated with each score. To the right are links to personalized recommendations and preapproved credit offers.

The Company: Atlanta-based WorthKnowing.com was founded in July 1999 and opened the beta version of its service to the public in Sept. 2000, with the “official” launch on October 24.

The company was founded by KK (Krishnakumar) Srinivasan, WorthKnowing’s current President, and James Eckstein, CEO of Visionary Systems Inc., which provides much of the technology and processing for the startup.  Both men previously worked at Equifax, one of the three large U.S. credit bureaus.

WorthKnowing was founded with investments from Atlanta-area angels. While the company pursues its first round of venture capital for a full-scale expansion, it’s been experimenting with advertising on AccessAtlanta.com, GoTo.com, and others Web sites. So far they’ve had approximately 10,000 site visitors.

 

Management Team

Name (email)	Position	Background
Krishnakumar Srinivasan (kk@)	Co-founder & President	Ph.D. in Artificial Intelligence, worked at Equifax and First USA Bank
Deborah Bailey (dbailey@)	Acting CFO	Currently on the executive management team at Visionary Systems, a strategic partner of WorthKnowing
Lisa Volmar, (lvolmar@)	VP Operations	From the computer communications and telecommunications industry with experience at Motorola and Verilink
Kathryn Petralia, (kpetralia@)	VP Biz Dev.	Five years of experience in Internet companies with USWeb
Tim Bates, (tbates@)	VP Lender Dev.	Also from Equifax with prior experience at CCN (now Experian Strategic Solutions) and First North American National Bank

Source: company, 11/15/00

The Product and Business Model: WorthKnowing bills itself as “an independent credit marketplace dedicated to helping consumers make informed credit decisions.” It’s a cross between GetSmart, LendingTree, and QSpace.

WorthKnowing has a simple and valuable product, free online TransUnion credit reports. Consumers get quick access to their credit report and receive the information nicely packaged in an educational format that includes a WorthKnownig proprietary credit score on a 1-to-100 scale. Furthermore, the site is devoid of banners and the usual hucksterism found on sites dealing with credit and especially problem credit.

The company hopes to derive revenue not from the credit report itself, but from matching lenders with borrowers. After reviewing their credit report, users have the option of viewing credit offers they have qualified for on the basis of their credit profile. A key differentiating WorthKnowing feature is that the credit offers are made without a hard inquiry on the consumer’s credit bureau. The preapproval process results only in marketing inquires just like traditional direct mail. WorthKnowing has applied for a patent on the process.

Third-Party Providers: WorthKnowing has wisely secured endorsements from the leading third-party privacy and security watchdogs, including:

credit reports	TransUnion
credit card processing	CyberCash
site security	ICSA
others	Online BBB, VeriSign, Truste

 

How it Works: Overall, it’s a pretty simple process, although WorthKnowing could improve usability in few areas and iron out some minor navigational glitches. During our initial test, we were one of the 20% of applicants not authenticated the first time through. So it took us almost 10 minutes to get our credit report. This does not count the time it took to look up our monthly car loan and mortgage payments, which are one of the important checks in the process. Had we been authenticated at the outset, it would have taken less than 8 minutes in total (see next page). The process goes like this:

Application screen #1 (bottom): WorthKnowing requires annual income, presumably used to help lenders make appropriate preapproved credit offers. At this point, the user may begin to wonder whether this is a legitimate free service. The company should explain why it needs this information.

 

The Signup Process

1.        User arrives at Worthknowing.com

2.        User completes a 3-page signup form. Authentication is accomplished using an algorithm that compares user-supplied data against that contained in the credit bureau database. Data points include: name, social security number, address, previous address, employer, and the amount of any mortgage and/or car loan payments.

3.        User receives a TransUnion credit report neatly summarizing the consumer’s situation including total revolving lines, usage, negative information, and so on.

4.        WorthKnowing translates the TU credit score into a 100-point scale and shows that type of credit offers a consumer is likely to receive at various scores.

5.        WorthKnowing provides personalized advice as to what the user could do to improve the score.

6.        Finally, the user has the option of viewing preapproved and non-preapproved offers of credit. Each lender providing preapproved offers will post a promotional credit inquiry to the user’s bureau report.

Putting the Clock on It

Elapsed Time	Milestone
0	At site, selected Get Free Credit Report button; glitch during page loading but eventually it comes up
1:18	First application screen displayed
4:23	First page completed
4:31	Error: Invalid street address, corrected and resubmitted
5:12	Second screen displayed
6:15	Second screen input complete
6:59	Third screen displayed with user agreement
7:45	Read agreement and pressed enter (Problem: At least with Netscape 4.5, you can’t print or save the frame containing the user agreement and there is no option to have it emailed to you.)
7:59	Error: Unable to verify my information
8:05	Edit loan amounts
8:14	Back to screen 3
8:23	Edit loan amounts again
8:33	Error: Unable to verify
8:40	Edit information again
9:03	Error: Unable to verify; gave up and looked up actual loan amounts and emailed company; came back the next day, entered actual loan payment amounts
9:48	Viewed finished credit report

Source: Online Banking Report test, 11/13 to11/14/00 using Compaq 1685 laptop with 56k modem and 300mhz chip. Began application on Monday at 5:00 p.m., Nov 13, finished 4 p.m. Nov 14.

End-User Pricing: The service is free except when requesting a new credit report more than once in any 90-day period. In those cases, each additional report costs $5. Reports are saved on WorthKnowing servers for 90 days. Users can go back and look at it as much as they like for no charge, although the report could be up to 90 days old.

Pricing to Financial Institutions: There are two ways of participating in the WorthKnowing service. You can become part of the lending network and make preapproved offers, or you can become a distributor, sending declined loan applicants to WorthKnowing.

Lending network participants pay WorthKnowing $30 to $70 per booked loan. The amount depends on volume and customer type. There is no fixed fee, so lenders only pay for actual booked loans. According to the company, the cost compares favorably to the $75 to $150 typically paid to acquire a new account.

For distributors, it’s not a cost but a revenue opportunity. A portion of WorthKnowing’s $30 to $70 finder’s fee will be shared with the company that sent the applicant to WorthKnowing. Naturally, these fees are negotiable, especially for potentially large distributors such as a major credit card issuer or bank. However, a consortium of smaller banks or credit unions might be able to negotiate similar terms.

Lender Network: Currently, seven lenders have signed on to offer credit to WorthKnowing users. So far, only CompuCredit is making preapproved offers, but others are interested. Three issuers focus on sub-prime credit, consumers with poor credit histories, or those with little credit experience. Eventually the company hopes to offer two to seven preapproved offers to each user. They expect this will require 25 to 30 active lenders in the network.

WorthKnowing Lender Network

Lender	Target Segment	HQ
American Express	prime	New York
Chase	prime	New York
NextCard	prime	San Francisco
Security First Network Bank (owned by Royal Bank)	prime	Atlanta, GA
AspireCard (owned by CompuCredit and issued by Columbus Bank and Trust)	sub-prime	Atlanta, GA
Action Card from BANKFIRST	sub-prime	Sioux Falls, SD
Net 1st National Bank	sub-prime	Boca Raton, FL

Source: OBR test and interview with the company, 11/15/00

 

Distribution Strategy: The company hopes to derive a significant amount of traffic by serving the declined loan flow from credit card issuers nationwide. WorthKnowing estimates there are 70 to 100 million declined loan applications each year. For each decline, the financial institution’s credit reporting service is required to give the loan applicant a free copy of their credit report if requested.

WorthKnowing hopes that companies will direct declined applicants directly to its Web site where consumers could view an instant copy of their credit report AND consider preapproved credit offers from other lenders.

This benefits the original financial institution by:

1.       Reducing customer service cost in servicing declined applicants

2.       Helping declined applicants find credit increasing overall customer satisfaction (if only slightly)

3.       Giving them a share of WorthKnowing’s revenue if the declined applicant accepts a credit offer from WorthKnowing’s lender network

One company has signed on to be a distributor and another deal is in the works.

What’s Ahead: The company is pushing forward on a number of fronts including:

• signing up more lenders for its lending network
• finding credit card issuers willing to send their declined applicants to WK
• building a brand and driving consumers to its Web
• improving the Web interface, revised version due out in 3 to 4 months
• securing additional capital

Later, the company plans to branch into other types of credit products including, car loans, mortgages, and home equity.

 

Analysis

Even before talking with the company, we liked what we saw. But our conversation with founder Krishnakumar Srinivasan convinced us they deserved a Best of the Web designation. By offering free credit reports, personalized advice, and access to a broad range of credit providers, the company is genuinely helping consumers.

Even more important, they appear to have developed a new, potentially profitable business model helping large card issuers reduce costs and improve service to declined applicants. If the company can land a couple major card issuers, they will be well on their way to building a critical mass of users.

While at least three other companies deliver online credit reports, no one else offers them for free¹ or with integrated preapproved credit. That makes WorthKnowing uniquely situated to serve the needs of millions of declined loan applicants each month.

If you are a large credit card or loan originator, you should consider WorthKnowing as a source of new accounts. You pay only for approved applicants, so there is little risk.

If you are not a large lender, you should still consider working with WorthKnowing on one or more of these fronts:

• Resource for declined applicants: Refer declines to WorthKnowing to view their credit report, see where they stand, and find other lenders serving their specific profile. The linkage could be co-branded or a simple hyperlink.
• Co-branded card-issuing site: If you are not issuing your own credit card, consider putting WorthKnowing on your site in a co-branded fashion to deliver credit reports and credit card offers to your customer base.
• Credit card research center: Install WorthKnowing in your research center so consumers can view their credit report and shop for other credit offers if they so desire.

¹ConsumerInfo.com offers a free credit report, but you have to signup for an annual $69 credit monitoring service to claim the free report.

Home page: If you’re an unknown dot-com advertising free credit reports and demanding a social security number, you will be met with considerable skepticism. WorthKnowing does its best to build credibility with good design, layout, and the “Big 4” third-party endorsements running across the bottom: BBC Online, VeriSign, ICSA, and Truste.¹

The site is well-designed, although there were a few glitches on Netscape Navigator 4.6 (we didn’t test any other browsers), such as this perplexing problem where the top frame would not go away even when it was repeated below. We had to restart back on the home page to get rid of it.

¹WorkthKnowing should remove the social security number request from the first page. Even though a SS# is necessary to access a credit report, such prominent placement is sure to chase away many potential users.  The company does promise to purge social security numbers from its files after the expiration of the 90-day credit report storage period.

Application screen #1: The application is laid-out in a low-budget fashion, with little embedded help or explanation. This is an area that needs improvement to reduce the percent of users who bail out of the application when they become frustrated or uneasy with the questions.

 

Application screen #2: The company has been developing an authentication scheme that requires information not readily available in the user’s wallet. Users are required to list the dollar amount of their car loan and mortgage.

NextCard application button takes you to the above screen.  The “Credit Recommendations” page contains good advice geared to your credit profile. In our case, seven recommendations were included: double-check the data, balance your revolving accounts, close accounts not using, do not apply too often or too quickly, avoid personal finance loans, always pay bills on time, pay attention to your credit. 

Example Credit Offer: NextCard is not currently preapproving offers to WorthKnowing users. Clicking on the “Apply Now” button takes you to the provider’s Web site where all the info must be rekeyed.

 

 

Credit card offers: Based on the user’s profile and credit score, lenders make preapproved or non-preapproved credit offers. In our test, none of the offers were preapproved; all required an application. The choices were Chase Platinum, NextCard, and American Express