Debt Scoring Software
Credit scoring software is an essential tool for financial institutions of all sizes. Without knowing a potential borrower’s credit history, an organization will not know how reliable he or she will be in making payments. With recent research showing that consumer spending habits are changing, it is important to have current software in place so creditworthy borrowers are found.
According to the Q2 2013 Credit Card Debt Study from CardHub.com, Americans incurred just over $17 billion worth of credit card debt in the second quarter of 2013. Furthermore, the average household now owes an average of nearly $6,700 to credit card lenders.
During the first quarter of this year, U.S. consumers managed to pay down $32.5 billion in existing credit card debt, which means that the new amount of money owed erases nearly 50 percent of that.
CardHub CEO Odysseas Papadimitriou told the San Antonio Business Journal that it’s common in the first quarter for customers to pay down their credit card debt. Then, there is generally an increase over the next three quarters, which is why the data for 2013 is not very different from other years.
“However, the fact that charge-off rates are near record lows is significant, as it indicates that consumers are no longer leveraging credit card debt in order to meet basic needs during times of financial hardship,” he said. “Instead, habitual over-leveraging now seems to be a choice.”
Banks need to be aware of consumer spending habits so they can continue to make sound financial decisions. With comprehensive credit management software, organizations can stay up-to-date on their accounts and ensure that customers are keeping pace with their payments.