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Living with credit, New products, Shopping

You can now apply for credit by sending a text

Brady Porche

Applying for credit while shopping for a car or a new TV is now as simple as texting “LOL” to your BFF.

Credit bureau Experian recently unveiled Text for Credit, a new service for lenders that allows consumers to apply for credit cards and loans via text message. All you have to do is text a keyword to a number provided by the lender, and an automatic reply sends you a link to a page where you can review credit offers and apply.

You don’t even need two thumbs to fill out the application – Experian says most consumers will be recognized by their device credentials. If approved, you instantly receive your account information (or a bar code), and you’re ready to shop. Experian said in a news release Text for Credit is available at major retailers and auto dealerships, which suggests it’s not yet available for general purpose credit cards. (Experian declined to say which stores and lenders are using it.)

Experian executives Alex Lintner and Reshma Peck demonstrated Text for Credit in a July 11 Facebook Live segment filmed in an auto dealership. Lintner texted the word “credit” to a number that was displayed on the windshield of a car in the dealership’s showroom.

In a matter of seconds, he selected a credit offer from a list of options, provided the last four digits of his Social Security number and was approved for a line of credit.

Questions poured in from viewers about the security of this method of applying for credit. After all, what if an identity thief hacks into your phone, steals all your personal information and helps himself to your new credit line?

Lintner responded that filling out a paper application at a retail store can be riskier. Other shoppers standing behind you can read your personal information over your shoulder or even steal your completed application if it’s left lying about.

Applying for a car loan may not involve standing in line with people you have no reason to trust. But as Lintner and Peck pointed out, there’s usually a lot of waiting and it can be awkward, especially if you’re denied credit. And no one likes doing paperwork or watching daytime TV in a customer lounge area while that shiny new dream car sits vacant in the lot.

Are consumers sufficiently impatient and paranoid to start applying for credit only via text message? Experian’s own research suggests as much. A recent survey revealed 58 percent of consumers cited privacy and 42 percent identified wait time as being among their top three concerns about applying for credit at a retail location. Twelve percent said they had walked away from a purchase because applying for credit took too long and 16 percent bailed because another shopper in front of them was applying for credit.

Applying for credit cards and loans on mobile devices has gotten much easier in recent years, and many experts agree that it’s safer. But it begs the question of whether removing barriers to applying for credit can encourage impulse buying and, ultimately, overspending.

It’s a real concern in the retail environment, where deferred interest deals can lure even the most discerning consumers into buying things they don’t need. A $3,000 TV doesn’t look like such a heavy lift when you spread the payments over 36 months with no interest – but it can be quite painful if you still don’t pay it off on time.

For those consumers who apply for retail credit cards fully confident that they can pay their bills on time and avoid paying interest, Text for Credit could be a nice time-saver. The same goes for new car buyers who are eager to get out of the dealership and into the driver’s seat.

See related: Starbucks gift cards are now just a text away, Why you should sign up for your card issuer’s text alerts

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