When financial institutions begin the often arduous process of choosing borrowers with a strong credit history, it is important that they have the right tools in place. With credit and risk management software, banks will better be able to choose individuals who are creditworthy and can repay loans on time.
Research released earlier this month showed that this process might become even easier, as credit card delinquency has reached its lowest level since 1990. According to an American Bankers Association report, credit card payments more than 30 days past due dropped to 2.41 percent in the first quarter of 2013.
James Chessen, ABA's chief economist, said in a statement that this is due in part to rising stock prices and an improving job market, as these increased household wealth. Furthermore, consumer confidence is on the rise, which also likely helped lower the delinquency rate. To ensure that these improvements continue, Chessen explained that the job market needs to continue growing.
"The future pace of delinquencies depends on a steadily improving labor market and strong financial health for consumers," he said. "This will allow consumers to more easily meet their debt obligations."
Another positive sign is that consumers are no longer afraid to have a balance on their credit cards. A separate report from the Federal Reserve released earlier this month said that credit card balances had spiked nearly 9 percent in May compared to the same time last year.
Even with consumers becoming more confident and getting a better handle on their personal credit, banks must still take care when choosing borrowers. Comprehensive lending software can assist financial institutions in making decisions that will be beneficial to them and their customers.