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Managing credit limits effectively is vital for maintaining a profitable and resilient credit card portfolio. By adopting a proactive credit limit management approach, financial institutions can significantly improve customer satisfaction and increase revenue. As of Q3 2024, the average credit card limit in the U.S. stood at $32,025, marking a 4.1% rise from $30,763 the previous year.1 Proper management of these limits is crucial for financial institutions, as it impacts consumer borrowing capacity and overall financial health. Advantages of proactive credit limit increases A proactive credit limit increase occurs when a credit card issuer raises a cardholder’s credit limit without their request. This action is usually dependent on improvements to cardholders’ creditworthiness, including consistent, on-time payments and a reduction in debt. Proactive increases can enable financial institutions to: Increase interchange income: When financial institutions increase credit limits, they can boost transaction volumes, leading to higher interchange income. Generate additional interest income: Higher credit limits can lead to increased borrowing, resulting in more interest income for financial institutions. Enhance wallet share: By proactively increasing credit limits, institutions can encourage cardholders to use their cards more frequently, thereby increasing wallet share. Reduce customer attrition: When cardholders feel valued and supported, they are more likely to remain loyal to their financial institution. Proactive credit limit increases can reduce attrition rates by enhancing customer satisfaction and loyalty. Improve customer experience: Cardholders value the convenience and flexibility of higher credit limits, which can lead to increased satisfaction, positive sentiment and potential referrals. Implementing proactive credit limit increases To successfully implement proactive credit limit increases, financial institutions must address two key questions: Who receives an increase? Use insights to identify cardholders who meet the criteria for credit limit increases. Continuously monitor cardholders’ creditworthiness using advanced tools and technologies to ensure that only responsible cardholders receive increases. How much of an increase? Determine customers’ ability to afford additional credit by evaluating their annual income, debt-to-income ratio, and payment-to-income ratio. Set thresholds for these metrics to guide the decision-making process. Proactive credit limit management Effective credit limit management is essential for financial institutions aiming to grow their credit card portfolios and enhance customer satisfaction. Read this e-book on proactive credit limit management and discover how your institution can improve wallet share, enhance customer experience, and drive revenue. Read the e-book 1 Experian, Average Credit Card Debt Increases 3.5% to $6,730 in 2024.

Lending institutions need to use the right business strategies to win more business while avoiding unnecessary risk, especially regarding lending policies. A recent study revealed that 48% of American loan applicants have been denied over the past year, with 14% facing multiple rejections. Additionally, 14% of rejected applicants felt pressured to seek alternative financing like cash advances or payday loans.1 These statistics highlight the need for financial institutions to offer attractive loan options to stay ahead in the industry. Understanding loan loss analysis Loan loss analysis is a powerful tool that helps lenders gain insights into why applicants book loans elsewhere. Despite efforts to target the right consumers at the right time with optimal offers, applicants sometimes choose to book their loans with different institutions. The lack of visibility into where these lost loans are booked can hinder a lender’s ability to improve their offerings and validate existing policies. By leveraging loan loss analysis, lenders can turn valuable data into actionable insights, creating more profitable business opportunities throughout the entire customer lifecycle. Gaining deep consumer insights Loan loss analysis provides visibility into various aspects of competitors’ loan characteristics, such as: Type of financial institution: Identifying whether applicants prefer banks, credit unions or finance companies can help lenders tailor their offerings. Average loan amount: Understanding how much other institutions offer allows lenders to adjust their loan amounts to be more competitive. Interest rates: Comparing interest rates with competitors helps lenders calibrate their rates to attract more business. Loan term length: Knowing the term lengths offered by competitors can inform decisions on loan terms to make them more appealing. Average risk score: Determining the risk scores of loans booked elsewhere helps lenders optimize their policies to maximize earning potential without increasing default risk. Making profitable decisions with business intelligence Experian's loan loss analysis solution, Ascend Intelligence Services™ Foresight, offers comprehensive insights to help lenders: Book more loans Increase profitability Enhance acquisition strategies Improve customer retention Optimize marketing spend By determining where applicants ultimately book their loans, lenders can unlock deep insights into competitors’ loan characteristics, leading to more intelligent business decisions. Read our latest e-book to discover how loan loss analysis can help you gain visibility into competitor offerings, improve your lending policies, book higher-performing loans, and minimize portfolio risk. Read the e-book Visit our website 1 Bankrate, February 2025. Survey: Almost half of loan applicants have been denied over the past 12 months.

In today's competitive market, expanding your organization’s customer base can be a daunting task. Limited marketing budgets, high acquisition costs, and the pressure of financial inclusion initiatives can lead to poor response rates and make it challenging to reach the right consumers. If your prescreen policies are too conservative, you might miss out on valuable opportunities. On the other hand, overly lenient policies can lead to wasted resources on uninterested consumers. So how can you strike the perfect balance and ensure your marketing efforts are both effective and efficient? Challenges for financial institutions Research shows that 55% of financial institutions reported building response models that don’t make it to production.[1] This can lead to wasted time and effort as employees work to build models that are never used, which can have a severe negative impact on organizations’ productivity and team members’ morale. In addition, most organizations are not well-equipped to conduct their own analytics, citing limited access to data for response modeling and challenges with incorporating models into a comprehensive campaign strategy. Many institutions are unsure of who to send offers to, which channels to utilize, which offers to send, or how often to send them. To effectively reach consumers, financial institutions need to: Easily access and understand the right data Quickly move to production Deploy models with little to no friction Monitor and refresh models to avoid deterioration Maintain regulatory compliance  So how can your organization accomplish all this to ensure you’re reaching the right consumers with your offers? Ascend Intelligence Services™ Target Ascend Intelligence Services Target (Target) is a cutting-edge solution designed to help businesses target the right consumers with precision. This service leverages custom response models and optimized prescreen strategies to enhance response rates and maximize revenue. At the heart of Target are custom response models developed by industry experts using advanced machine learning (ML) techniques. These models analyze historical data alongside Experian's best-in-class data to identify consumers who meet credit criteria and are more likely to respond to offers. By accurately predicting consumer behavior, these models enable organizations to maximize the return on investment (ROI) of their marketing campaigns and achieve their revenue goals. Additionally, exclusive access to alternative datasets from nontraditional lenders, rental data inputs, and full-file public records provides a comprehensive view of consumer behavior. The inclusion of 24 months of trended data and over 2,000 attributes can further enhance your ability to determine the next best action for each consumer. Watch this video to learn more about Ascend Intelligence Services Target. Optimized prescreen strategy Target's prescreen strategy is mathematically optimized to calculate the impact of your offer on each consumer simultaneously. This approach selects the best consumers to target, allowing you to: Increase response and take-up rates for improved portfolio performance. Minimize prescreen costs by targeting the right people who are more likely to respond to your offers. Expand your lending universe safely and meet diversity and inclusion initiatives by providing the right offer to previously overlooked consumers. Seamlessly integrate into your existing prescreen process for rapid time to value. By incorporating additional variables such as trended and alternative data, you can reach more consumers who might have been overlooked, improving financial inclusion and safely growing your portfolio. The power of optimization allows you to tailor your offers to each consumer, increasing response and take-up rates and enhancing the profitability of your campaigns. Visit our website to learn more about how your organization can utilize our prescreen strategies to maximize your revenue. Learn more [1] Experian research