Credit Bureaus Devising Tools to Find Debt-Prone Consumers

By Fickenscher, Lisa | American Banker, March 29, 1995 | Go to article overview

Credit Bureaus Devising Tools to Find Debt-Prone Consumers


Fickenscher, Lisa, American Banker


Credit card issuers are becoming more interested cardholders' propensity to accrue debt, because of the profit potential. Traditionally, the credit card industry has emphasized the use of risk scores to determine the creditworthiness of potential customers. "Modeling just (credit) risk is passe," said Martin E. Abrams, director of privacy and consumer policy for TRW Information Systems and Services. "Now you want to model everything having to do with profitability." The three major credit bureaus have recently introduced modeling tools that measure more than just a person's risk score.

They have begun to define risk in different terms.

"Today the risk might be that a customer is not profitable," added Mr. Abrams.

Last week, Equifax Inc. introduced a product called Bankcard Usage Predictor that identifies people who are likely to use a credit card as well as carry a balance.

Developed by the decision systems unit of the Atlanta-based credit bureau, the new product predicts a cardholder's spending patterns over one year, providing both account monitoring and pre- screening information. It can also be used for cross-selling and increasing credit limits. "Most of our credit card customers used to rely on models to make a decision on whether to give someone a card," said Alton Adams, vice president of Equifax Credit Information Services. But now "our customers want us to identify people who may not have the best credit risk score and are prone to running up balances."

Equifax's announcement comes on the heels of another product launched by TRW and Fair, Isaac & Co. …

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Credit Bureaus Devising Tools to Find Debt-Prone Consumers
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