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By Kevin Pipkins
In today’s lending landscape, rising inflation and interest rates
continue to grab headlines. And according to Equifax risk experts,
credit card use is also on the rise, along with consumer delinquency
in some segments.¹
While these trends can be concerning, they also represent
opportunity for responsible lenders to find new ways to support
customers while still mitigating risk.
A 2022 survey from the
Consumer Financial Protection Bureau (CFPB) found that 37% of U.S.
households could not cover expenses for more than a month if their
main source of income was lost.² And nearly half of credit
card users also don’t pay their full balance and instead “revolve”
their debt from month to month.
This can add up to potentially rapid shifts in consumers’
debt-to-income (DTI) ratios and ability to pay. Which is exactly why
you should regularly review your portfolio — including closely
monitoring changes in employment and income, ideally on a monthly basis.
Even as markets rapidly change, you’ll have a better, more
updated picture of how your portfolio is performing so you can stay
ahead of any potential risk.
Aside from mitigating your risk exposure, more frequent
portfolio reviews also provide opportunities to proactively identify
current borrowers needing support in maintaining a line of credit.
Generally, lenders review accounts for borrowers with an active line
of credit to help the borrower maintain credit and, in some cases,
increase credit availability.
When you notice signs of potential financial distress, like
loss of income, you can take steps to connect customers with
resources or accommodations before their account becomes delinquent.
This personalized, proactive support builds loyalty.
Helping shepherding your customers through difficult
financial times can help you establish yourself as the lender of
choice. This can prove beneficial when customers are back on solid
financial ground and still have you top of mind.
Staying ahead of a volatile market and supporting your
customers in the face of economic headwinds starts with the right
data. The Work Number provides crucial insight into previous and
current income and employment data, so you can better manage risk
and lend responsibly.
To learn more about the benefits of frequent portfolio
reviews and how The Work Number can help, visit theworknumber.com.
“Don’t Miss Portfolio Review Musts to
Stay Resilient.” https://www.equifax.com/resource/-/asset/video/do-not-miss-video/
“Making Ends Meet in 2022: Insights from
the CFPB Making Ends Meet survey.” https://www.consumerfinance.gov/data-research/research-reports/insights-from-making-ends-meet-survey-2022/.