How To Make the Most Out of Your Customer Data In The Payday Lending Industry

Quickcheck Canada
July 22, 2016

While there are challenges in managing any business, lending or money transfer companies have a very unique set of issues they must address. Some of the most important duties for the owner of a payday loan company is to keep information safe, to remain in compliance with the law, and to minimize risks to the company. In order for a payday loan company to minimize risks, they need to have access to the right reports so they can analyze their potential exposure to these risks. It's also important for payday loan managers to know what to do so they can get mitigate risk to decrease the possibility of losing profits.

Using Customer Data to Ensure Minimal Risk

Before a loan can be provided to a borrower, there are some important things a payday loan company should consider. In addition to asking for payment verification and performing identity checks, these factors should also be taken into consideration:

  • A Borrower's History with Repaying Loans
    If someone has a history of not paying back their payday debts, they should not be given a loan for a high-value sum, as it can put the company at risk of losing money.
  • A Borrower's Assets
    Things people own should be taken into consideration when they are asking for a loan. If someone owns a car or a house, this information should be provided to the lending company.
  • A Borrower's Credit Score
    A customer's credit score can offer insight as to how they fare on bill repayment across all of their obligations, not just payday loans. This can help you get a larger picture of their repayment habits and properly assess the risk they pose.
  • A Borrower's History with Extended Loans
    If someone paid back their loan but required a few additional days to get the payments in, this information should be known to the lender.

Properly Managing Risks

While it's important for loan officers to be aware of how to identify risky borrowers and what they should do about them, management also needs to have training and be prepared to deal with unusual and uncommon issues that may raise red flags. There are instances when people seem like they are going to payback their loan, yet still pose problems when trying to collect the money. People may sometimes need the cash for an emergency situation and have a regular job, but still avoid paying their loan on time. A manager needs to know how to identify warning triggers and what to do about them when they appear. The way a manager interprets the situation and analyzes risk decisions is crucial to a payday loan company's success overall. If there is a potential risk of losing money, a manager may need to utilize advanced collection techniques.

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