The key to any successful direct mail campaign is to strike a balance between risk and responsiveness. A well balanced campaign can produce a low cost per funded loan and a low default rate. After a few campaigns, a re-optimized model is needed to further enhance your direct mail campaign performance.
Volume: Campaign should have enough volume to gain meaningful insights
Data: Use FCRA and Non-FCRA data, avoid using demographics
Firm Offer of Credit: is always better in terms of response rate
Use Multiple Credit Bureaus: Each bureau has unique coverage
Conduct A/B Testing whenever possible
Response Model should be paired with a risk model to control for defaults
Build a landing page with the same look and feel of your direct mail creative.
For clients with longer-term products beyond 2 years of service, prepayment speed is important. We also advise our clients on prepayment speed. On one hand, a prepaid loan is by definition not a defaulted loan, however a fast prepayment speed could hurt your profitability especially when our clients offer incentive programs.
Higher FICO scoring population generally prepays faster
0.5-1% prepayment speed per month is generally acceptable
Prepayment speed exceeds 2% per month needs investigation
Credit risk remains the single biggest issue amongst our clients. Credit risk or defaults could be caused by various reasons such as customer acquisition channels, pricing, terms and amount of the credit offered. It could also be ineffective underwriting data, rules and models. Here are some quick reason on effectively managing your credit risk.
Fraud Control: 1st Party, 2nd Party and Third Party Fraud Prevention
Our clients greatly benefited from MaxDecisions insight into their existing credit bureau feed. We have worked with most of the prime and subprime bureaus to further refine the reported information to give our clients a lift in performance.
Hundreds of additional credit attributes that’s been tested
MaxDecisions Enhanced Credit Attributes goes beyond standard trade line information
We transform unusable unstructured data into organized readable format so our clients can write enhanced rules
Clients doesn’t have to purchase additional information from credit bureaus.