Loading...

Holiday spending – are lenders ready?

November 11, 2010 by Guest Contributor

By: Staci Baker

As we approach the end of the year, and the beginning of holiday spending, consumers are looking at their budgets to determine what level of spending they can do this holiday season, or if they will need additional credit for those much wanted gifts. With that in mind, it is a great time for lenders to evaluate their portfolios to determine which consumers are the best credit risks.

According to the National Retail Federation, consumer spending will be up 2.1% for the 2010 holiday season. Although still at pre-recession levels, consumer confidence is starting to re-bound.  But, with an increase in consumer confidence, how will lenders meet the demand for credit, and determine the credit worthiness of potential applicants?

Since the beginning of the recession there has been a demand for tools that will assist lenders in managing credit risk. One such tool is the tri-bureau VantageScore, a scoring model that is highly accurate, offers greater predictiveness, and is able to score more people. Scoring models allow lenders to predict the likelihood a consumer will default on a loan.

Determining who is a qualified candidate through scoring models is only part of the equation. Each lender needs to determine what level of risk to take, and what is the cost of the credit per applicant. By assessing credit risk, having a good plan in place and knowing who the target customer is, lenders will be more prepared for the holiday season.

___________________
National Retail Federation, http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1016

Related Posts

Using alternative data for credit underwriting is a modern and efficent approach to a risk-based credit approval strategy Read more!

February 13, 2024 by Laura Burrows

With rapid growth comes an increased risk of fraud, making "Buy Now, Pay Never" a crucial fraud threat to watch out for in 2024.

February 12, 2024 by Alison Hillendahl

View our interactive e-book for the latest economic and consumer trends and learn how to set your portfolio up to succeed in any economic cycle.

June 15, 2023 by Laura Burrows