The signs of an account going
delinquent and how to prepare for it
Why?
Certain indicators can help predict the likelihood of an account falling into delinquency. These indicators include:
– Negative movements in FICO and VINTAGE scores.
– Sudden changes in spending patterns, both in terms of quantity and quality.
– Making consecutive minimum payments to maintain an active card status.
– Exhausting the available credit limit.
Credit card and retail collection initiatives typically encompass around 25 to 40% of customers, as most individuals make regular payments or minimum payments to keep their cards active. Delinquency rates may vary depending on borrower classification, with sub-prime customers generally exhibiting higher delinquency levels compared to prime customers.
Consumers face ongoing financial obligations across various segments, such as credit cards, mortgages, auto loans, and more. These payments are all drawn from the same pool of funds, with a limited amount available to distribute among multiple creditors. Consequently, some payments may be defaulted. A strong collection strategy and skilled collector can strive to secure a larger portion of the consumer’s available funds. This requires unbiased analysis of data and continuous refinement of strategies to enhance performance.
Collection efficiency and effectiveness rely on several key strategies, including dialer and file level management, effective call control and performance at the collector level, and strict adherence to compliance regulations, among other factors.
What?
Within the customer spectrum, credit card usage differs between the upper and lower ends. The upper end of the spectrum primarily views credit cards as a convenient payment tool, while the lower end relies on credit cards for accessing credit. It is important to recognize that strategies effective for the convenience-focused segment may not be applicable or effective for the credit-driven segment.
Who?
Our extensive collaboration with clients and call centers has been dedicated to enhancing customer acquisition and improving customer service effectiveness. By leveraging the power of data, we are able to minimize wasteful efforts and optimize results. We are confident that we can provide similar services tailored to meet your specific needs. For further information, please contact us at info@cclyticx.com.