The Importance of Credit Portfolio Reviews

Gain a Competitive Advantage with Credit Portfolio Reviews

The COVID-19 pandemic combined with a prolonged period of high inflation has significantly altered the credit picture for the average consumer, as well as the value of consumers’ portfolios overall. These are two key factors affecting the health and viability of every lender’s portfolio. For lenders, it is important to conduct a portfolio review no matter the prevailing economic climate. Having the right resources, data and insights can make all the difference in managing a portfolio’s risk and maximizing its profit potential.

Credit & Collateral Trends

According to the Federal Reserve Bank of New York, “total household debt rose by $148 billion, or 0.9 percent, to $17.05 trillion in the first quarter of 2023.” While consumer debt is increasing, portfolio values have seen enormous amounts of volatility over the past few years. 

In April 2023, there was a nearly 80% increase in consumer debt write-off (non-mortgage) compared to 2022 totaling $8.62 billion.*

Efficiently & Thoroughly Review Lender Portfolios

Given this volatility, it is imperative that lenders have insights into the overall impact on their portfolios. Equifax’s The Work Number® Portfolio Review provides the updated, expanded view lenders need to better understand their customers’ present financial situation. This view helps them make more informed and confident account management decisions. The Portfolio Review solution provides employment and income details that can help assess consumer behaviors during fast-changing market conditions.

Employment and income insights may help identify trends in your portfolio. These may indicate a consumer’s potential to be delinquent or default on their debt obligations. This data helps inform credit line management, loan or payment modification plans, contact prioritization, and credit reissue decisions.

Finding a More Meaningful View of the Customer

A review of a portfolio allows lenders to have a more relevant and meaningful view of consumers. With enriched information specific to their account management needs, lenders can proactively identify risk and opportunity at key stages of the account lifecycle. They can confidently make decisions that help reduce loss by prioritizing treatment activities. In doing so, lenders can accomplish several critical items that will help their organization:

• Determine the proper level of funding for debt reserves and portfolio credit mix

• Quickly determine creditworthiness for credit line increases

Deeper Levels of Understanding Risks With Portfolio Review 

A growing number of lenders are leveraging critical, instant databases from leading providers such as The Work Number for income and employment verifications. With over 161 million employment records from current employers, The Work Number helps lenders effectively and efficiently review a portfolio of consumer accounts. 

It is important for lenders to conduct a portfolio review, regardless of the state of the economy. This activity can help lenders mitigate risk in their portfolio and identify potential opportunities for growth. Equifax has advanced technologies that can help lenders gain better insight into and understanding of each consumer.  This can help in developing proactive customer account management strategies.

* U.S. National Consumer Credit Trends Report: Portfolio, May 24, 2023; Consumer Debt Observations as of April 2023.