Chapter 15: Data-driven Marketing (DDM) CMS
IN THIS LESSON
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The materials used in the custom environment to ensure a customer’s prescreen criteria has been coded correctly and validate the prescreen decision on each customer. Typically, this consists of audit stats and masked credit sample files.
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Suppression files typically includes names that need to be excluded, suppressed, or omitted from the final output file. Examples may be a customer that has been previously charged-off, or already utilizes the product with the financial institution.
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In the Offline environment, a source project is any list sourced from the customer’s own database or purchased from a third party.
A direct extract is where we extract the names from the credit database to be prescreened by state and/or zip code.
This pertains only to Offline.
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A criteria policy in lending refers to a set of guidelines, rules, and requirements that a financial institution or lender establishes to evaluate and determine borrowers' eligibility for loans or credit. These criteria assess the creditworthiness and risk associated with lending money to individuals, businesses, or other entities. The specific criteria may vary from one lender to another, but they typically include factors such as:
Credit Score: Lenders often use credit scores, such as FICO scores, to assess a borrower's credit history and determine their creditworthiness. A higher credit score typically indicates a lower credit risk.
Income and Employment: Lenders will consider an applicant's income and employment history to determine their ability to repay the loan. Stable and sufficient income is usually a crucial factor.
Debt-to-Income Ratio: This ratio compares a borrower's monthly debt payments to their monthly income. Lenders use it to assess a borrower's ability to take on additional debt responsibly.
Loan Amount and Loan-to-Value Ratio: The amount of money requested and the loan-to-value (LTV) ratio, which compares the loan amount to the appraised value of the collateral (e.g., a home or car), can influence the lending decision.
Purpose of the Loan: Lenders may have different policies for different types of loans, such as mortgages, personal loans, or business loans. The intended use of the funds can impact the criteria.
Credit History and Payment History: Lenders review an applicant's credit history, including the types of credit accounts, payment history, and any past delinquencies or defaults.
Financial Stability: Lenders may consider the overall financial stability of the borrower, including savings, investments, and other assets.
Collateral: For secured loans, the quality and value of the collateral can be a significant factor in the lending decision.
Regulatory Compliance: Lenders must adhere to various regulations and industry standards when making lending decisions. These may include anti-discrimination laws, consumer protection laws, and regulations related to risk management.
Borrower's Age and Citizenship Status: In some cases, a borrower's age and citizenship status may play a role in determining eligibility.
Lenders use these criteria to assess risk and make informed lending decisions. They may have specific policies in place to ensure compliance with legal requirements, minimize risk, and tailor lending options to meet the needs of their target customers. The lending criteria may also be adjusted to adapt to changing market conditions or economic circumstances.
Sample Credit Policy: Credit Card Conservative
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In lending and credit analysis, data attributes refer to specific information or characteristics about a borrower or a loan application used to evaluate creditworthiness, assess risk, and make lending decisions. These data attributes provide valuable insights into the borrower's financial situation, payment history, and other relevant factors. Lenders use data attributes to determine whether to approve or deny a loan application and establish the terms and conditions of the loan. Here are some common data attributes in lending:
Credit Score: A credit score is a numerical representation of a borrower's creditworthiness based on their credit history. It is a critical data attribute used to assess the risk associated with lending to an individual or entity.
Income: The borrower's income is a key data attribute as it helps lenders evaluate the borrower's ability to repay the loan. It may include details about salary, self-employment income, rental income, or other sources of revenue.
Employment History: Lenders often consider a borrower's employment history, including job stability and the length of time with the current employer.
Debt-to-Income Ratio (DTI): The DTI is a data attribute that compares the borrower's monthly debt payments to their monthly income. It is used to assess the borrower's capacity to take on additional debt.
Payment History: Information about the borrower's past payment behavior, including any late payments, defaults, or charge-offs, is a crucial data attribute. It is typically found in a credit report.
Loan Purpose: The intended use of the loan funds is an important data attribute, as it can affect the lender's decision and loan terms. For example, a mortgage loan may have different criteria than a personal loan.
Collateral Information: For secured loans, data attributes related to the collateral, such as its value, condition, and legal status, are important.
Loan Amount and Term: The requested loan amount and the loan term are data attributes that help determine the risk and terms of the loan.
Credit History: Important data attributes are details about the types of credit accounts the borrower has, the length of their credit history, and the mix of credit.
Legal and Regulatory Compliance: Lenders must ensure that their lending practices comply with relevant laws and regulations, which can include data attributes related to borrower identification, anti-discrimination laws, and consumer protection.
Age and Citizenship Status: Certain lending products or terms may have age or citizenship requirements that are considered data attributes.
Outstanding Liabilities: Lenders may evaluate the borrower's existing debts and liabilities, including loans, credit card balances, and other financial obligations.
These data attributes are collected through various means, such as credit reports, application forms, financial statements, and other documents. Lenders use this information to assess the risk associated with lending to a particular borrower and determine the interest rates, loan amounts, and repayment terms offered. The specific data attributes and their importance can vary depending on the type of loan, the lender's policies, and the economic conditions at the time of the loan application.
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Trended data, often used in the context of credit reporting and lending, refers to a more comprehensive and detailed historical record of a consumer's credit behavior over time. It provides a lender or credit issuer with a broader view of a borrower's credit history, going beyond the traditional static snapshot of a credit report. Trended data includes information on how a consumer's credit accounts and balances have changed and evolved over several months or even years.
Key features of trended data include:
Historical Payment Data: It provides insights into how consumers manage their credit accounts over time, showing payment behavior patterns. Lenders can see whether a borrower consistently pays their bills on time, whether they tend to carry balances from month to month, or if they pay off their balances regularly.
Account Balances: Trended data may show how a borrower's credit card balances have changed over a period, whether they are paying down debt or accumulating it.
Credit Limit Utilization: Lenders can see whether a borrower utilizes a high percentage of their available credit limit on credit cards, which can impact credit scores and risk assessment.
Credit Account Open and Close Dates: It provides information about when credit accounts were opened or closed, offering insights into a borrower's credit history and account management.
Credit Score Trajectory: Lenders can observe whether a consumer's credit score improves, declines, or remains stable over time.
Including trended data in credit reports provides a more dynamic and forward-looking perspective on a consumer's credit behavior. Traditional credit reports, on the other hand, typically provide a static snapshot of a borrower's credit history at a specific point in time.
Lenders use trended data to make more informed lending decisions. For example, they can differentiate between borrowers who habitually carry high credit card balances and those who pay off their credit cards in full each month. This additional insight can help lenders assess risk more accurately and tailor their lending products and terms to individual borrowers.
It's worth noting that the use of trended data in credit scoring and lending may vary by region and by the credit reporting agency. Different lenders and credit models may emphasize trended data to different extents when evaluating borrowers.
EFX has various trended data sets available.
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Vendors previously had three classifications:
Vendor 1- Can receive name and address only
Vendor 2- Can receive name/address and credit data
Processing Partner- like Visible Equity/nCino or FIS
An example of V 1 would be a print service that gets a file from the bank or credit union of names and addresses only.
An example of C2 would be a Third Party (like HF Direct, D2K, or Amsive) that can do a net down on a prescreen using credit attributes appended to an output file.
Going forward- all vendors are being approved as Vendor 2, which requires an onsite and security procedure evaluation.
To check if a vendor is already approved or to get a new vendor approved- give Jane the info to check with the vendor team.
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SFTP (Secure File Transfer Protocol) is a way to transfer files to and from Equifax securely. The system uses PGP encryption. When the customer uploads their file, they encrypt it with the Equifax public PGP key, which is found here: MFT (equifax.com). Equifax then decrypts the file with its private pgp key. When Equifax sends the output file to the customer, it encrypts the file with the customer’s public PGP key, which the customer then decrypts with its corresponding private key.
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A hotel site is a temporary connection allowing secure transfer of files to and from Equifax. Since Equifax has a limited number of these “rooms” where customers can drop or pick up files, they are used sparingly and usually only when there is some issue with a customer using a permanent SFTP connection.
Like a hotel room, it is private/secure and is only yours for a limited time (usually 24 hours).