Re-evaluating your collections techniques
You would not set a primary cutoff score and never re-evaluate it, would you? Would you select risk- based pricing tiers and interest rates and never give them a second glance? The answer is no. You also would not select one collections strategy and never revisit that strategy. Even in the best of economic times, collection strategies should be reviewed to ensure that they are working properly and efficiently. In these difficult economic times, consider evaluating your collections strategies to ensure that you are limiting additional exposure to delinquency and loss.
Anytime you make a change to your cutoff scores or risk-based pricing tiers, you should evaluate your collection strategies as well. You may need to do any or all of the following:
Remember these tips for your collections strategies:
Periodically evaluating your collections strategies, along with your pricing tiers, interest rates and cutoff scores, will ensure that you are keeping all of the parts of your lending machine running smoothly.
If you would like additional suggestions for your collections department, please see the article published in our March 2007 issue of New Horizons titled “Scoring in Collections: Implementing a Credit Score to Maximize Your Collections Efforts.”