Debt relief

American consumers have a debt problem. And despite years of innovation by countless personal financial technology companies, change has been slow. There are several reasons for this, the first being that most consumers don’t want to be out of debt as bad as they want to live the lifestyle that debt affords. The second, and in many ways more troubling, explanation is that credit is a painfully opaque concept and therefore difficult for the average person to understand and manage effectively.

Since launching in early 2011, Y Combinator alumni ReadyForZero has been working to address this transparency issue. The company began by offering a single dashboard – in the form of both a Web and an iOS mobile app – from which to manage all of a user’s debt across categories, including credit card, mortgage, auto, education, and others. Then the company layered on intelligent payment optimization and acceleration tools to calculate the quickest and most effective path out of debt based on a user’s income and expenses.

Today, however, the company took perhaps its most significant step to date in unlocking the vagaries of personal credit management by tackling the credit score. Through a newly formed partnership with Experian, ReadyForZero became the first online personal finance platform to enable consumers to link accounts, make payments, and track their credit score all from within a single interface.

“This gets us 100 percent of the way to our original product vision,” says ReadyForZero founder and CEO Rod Ebrahimi. “We feel that we now offer everything that matters to someone tackling debt in a single place.”

The site is offering more than a simple “free credit score,” which can be found elsewhere on the Web. Rather, the company displays the score in the context of a user’s overall progress toward “debt zero.” Entering this partnership and gaining access to credit score data was no easy task. It required ReadyForZero to become fully PCI compliant and undergo an audit to become a trusted partner of Experian – something few companies ever get the opportunity to do.

“Our strategy has been to look for all of the hardest things to do and to focus on achieving those things,” Ebrahimi says. “Our competitors mostly look for the low hanging fruit opportunities to drive vanity user numbers. But eventually, we expect to be the only place to do anything debt related.”

There are limitations to the new integration, however. Based on the way Experian grants access to score data, ReadyForZero is only able to update a user’s score every 30 days. So if the platform calls for multiple monthly debt payments in an effort to accelerate repayment, the credit score displayed may lag this fact – an issue which can be compounded by slow reporting by credit issuers. Also, as a partner of just Experian, the site does not currently offer access to a user’s Triple Score, with blends the individual scores from each of the three credit reporting agencies. Finally, because the credit rating industry is opaque in the way it calculates credit scores, ReadyForZero is limited in its ability to forecast the impact various repayment actions will have on that score.

ReadyForZero recently crossed $75 million in debt paid down under its platform and is rapidly approaching $1 billion in total debt under management. The fastest growing segment on the platform is student loans, which now total nearly $200 million in total debt. The company’s mean client age is roughly 30 years old, and not surprisingly its audience is fairly well educated and tech savvy.

ReadyForZero is based in San Francisco and has raised $4.78 million across two rounds of financing. The company’s backers include Citi Ventures, Polaris Partners, 500 Startups, Steve Chen, Nils Johnson, Maneesh Arora, Ben Ling, and Y Combinator.

Users have the option to choose among a freemium version of ReadyForZero which allows basic debt tracking, and a paid PLUS version of the service priced at $7 per month or $75 per year which offers payment automatization and access to the newly announced credit score integration.

Based on all indicators, the service appears to be working. Not only are users paying down their debt and but a recent study completed in collaboration with a Top 5 US bank found that ReadyForZero users were 20 percent less likely to be delinquent when compared to a control group, according to the company.

ReadyForZero isn’t the only company looking to help consumers manage their finances. The category includes classic budgeting tools like Mint; investment advisory platforms like Personal Capital, Motif, Quantopian and others; and verticalized debt management platforms like education debt-focused Tuition.io. Because consumers are lazy and typically gravitate toward simplicity, each of these companies is a competitor for its ability to steal mindshare. But none offers the full suite of debt-focused tools and features that ReadyForZero now offers.

Consumer debt is a problem that affects us all, regardless of the state of our individual finances. As the 2008 financial crisis demonstrated, large scale defaults can ripple through the financial markets and ultimately affect the national and global economy. Any tool that can help consumers reduce their debt intelligently and effectively is one that stands to have an enormous impact. With the addition of credit score monitoring, ReadyForZero took a big step toward offering the most complete solution on the market.