The system has been built using criteria that aim to identify customers whose future payment performance may not match the original risk assessment because of adverse recessionary impacts.
The firm built the system because it believes credit scores built pre-recession may no longer perform as designed because the full impact of the recession is still to be felt as arrears are rising rapidly.
It added that lenders must understand the impact of the recession on their portfolios and must identify those customers that are most affected.
The benefits of the system include increased customer insight which identifies in advance those customers who are most likely to suffer from the impacts of the recession. Reason codes are provided that identify why the customer may experience problems.
Gary Scott, director at DecisionMetrics, commented: “These pre-delinquency and early collections scores are designed to be used in conjunction with a lender’s existing customer management processes to provide the very ‘recession insight’ that a lender’s existing behavioural scores are not capable of identifying.”
