Fair Isaac Corp. (FICO), has released a new product aimed at helping creditors convert more collections into recoveries. You may know Fair Isaac Corp. better as FICO. Yes, this is the company that releases the coveted FICO scores that are all so important to the Mortgage and Real Estate Industry. See PR from Fair Issac Corporation:
October 11, 2007 (Las Vegas, Nevada, USA) – Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision management technology, today introduced a comprehensive new suite of predictive scores at its 2007 Collections and Recovery User Group meeting in Las Vegas. Available immediately, Fair Isaac Collection Scores equip financial services providers in North America and the United Kingdom with a quick and effective way to reliably improve collection decisions and operational efficiency.
With consumer debt on the rise, credit grantors face a steady increase in delinquencies and charge-offs for both credit cards and loans. Fair Isaac Collection Scores are designed to fine-tune lenders’ ability to prioritize accounts in early stage collections for both card and loan portfolios, and late stages for card portfolios. Using early-stage collection scores, credit grantors can segment a portfolio based on accounts’ risk of rolling to later delinquency stages. Late stage collection scores allow lenders to rank accounts based on expected collection amounts.
By prioritizing accounts, the Collection Scores enable credit grantors to assign the appropriate strategy with the right amount of collection effort, resulting in increased total collections, lower charge-offs and better utilization of resources that directly impact the lenders’ bottom line. The Collection Scores also enable lenders to improve customer service by identifying likely ’self-cures’ and preventing potentially upsetting collector calls to a client’s best customers. (More)
In my opinion, this is FICO’s attempt to help the banks, who are their biggest constomers regain some income that has been lost in the “Credit Crunch”. I guess you can’t really blame them because FICO’s profit must have gone down with the decline in the Mortgage Industry. They are probably running half of the credit score reports that they did in 2005. Does this affect the Mortgage Industry directly? Well, amazingly, I believe it can really help.
In the near term, people will hopefully get the hint that that can no longer ignore collections. I believe that this product will allow creditors to aggressively pursue those that owe them money, with the knowledge that those they are pursuing have a probability of paying them back. I am not a fan of the collection tactics that alot of these creditors use, but I am even less of a fan of people not paying their bills. In the long term, hopefully people will catch wind that creditors have more tools in their arsenal of collection efforts AND will take the necessary measures to avoid
Both of these scenarios should help ensure that when people approach a lender to qualify for a home, they have a clean or cleaner credit history.
