Education as the key to debt management
Article Abstract:
The credit industry should play an active role in helping consumers achieve the 'good life' while meeting their expectations for their financial security. The common form of assistance given to individuals and families is information on financial management. However, this approach only maps the history of their financial decision making but does not help them in making future decisions. An alternative money management strategy is to focus on the process of managing the lifestyle of consumers. The first phase of this process, Discovery, calls for clients to answer a questionnaire regarding their current financial lifestyle. The next phase, Understanding, involves the development of a Lifestyle Report based on the information provided in the questionnaire. The third phase, The Plan, entails setting financial goals, while the last phase, The System, requires the creation of a mechanism to make the whole process work. These four elements are discussed.
Publication Name: Credit World
Subject: Banking, finance and accounting industries
ISSN: 0011-1074
Year: 1997
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Using segmentation analysis
Article Abstract:
A segmentation and targeting system enables creditors to identify the most profitable customer segments by dividing applicant populations into groups based on certain characteristics. A sample segmentation analysis divided customers using demographic and credit report information. Applicants in one segment were mostly in their mid-40s with high incomes and established credit, while applicants in another segment were younger with lower incomes and credit payment problems. These results will be used to develop scoring models for eachapplicant in each segment for accurate risk ranking. Results show that the use of segmentation and scoring models decreased the number of approved bad accounts by 13%. The segmentation and targeting system can also be used to findways of improving credit activation, usage, revenues and profits for each customer segment.
Publication Name: Credit World
Subject: Banking, finance and accounting industries
ISSN: 0011-1074
Year: 1993
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Balancing the extremes of the credit process with a "best practices" orientation
Article Abstract:
The ideal credit process is a simple system that is integrally connected to the culture and business objectives of a financial institution. However, the real-life credit process is usually a bureaucratic mess involving old and unacceptable policies, systems and procedures. Nevertheless, the credit process can avoid frustration, delays and errors by adopting best-practices solutions. This requires an extensive, systematic methodology that balances the risks and sales potentials involved in the credit process, and that is aligned to organizational business strategies and objectives. The four systems risks to be monitored are the information risk, control risk, value risk and compliance risk. The solution synchronizes the credit and sales functions in to an integrated process that results in the best outcome for the provider and the customer.
Publication Name: Credit World
Subject: Banking, finance and accounting industries
ISSN: 0011-1074
Year: 1997
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