New Experian Product Has Potential to Replace Traditional Credit App Procedures
July 1, 2004
A new product unveiled by Experian at the NACM Credit Congress this year has the potential to replace the way you traditionally check credit. The product is called "Decision Insight," and allows you to instantly check the credit of a potential customer and score it based on your own rules. We had the opportunity to demo the product and found it very easy and intuitive to set up and use. You can set up your own rules to either extend or reject credit. And you can set it up so that some in the middle, the "gray area," are pulled so that you can look at them manually. The product is aimed at the "mid-market" credit manager who might have high volume and small transactions. Their definition of small transactions is from $50,000 to $75,000 and down. The scoring is set up on a 0 to 100 scale, and is based on Experian's data in the following areas:
- payment history: here, the system will look at, among many variables, the current days beyond terms, compared to the industry, and the trends of high credit
- public records on liens and judgements
- collection activity
- 10 year bankruptcy information
- number of judgements
In addition, the system, when checking credit on small businesses, can combine consumer credit data along with the business credit data. Consistency & Efficiency
The advantages of this are the same as the advantages of any credit scoring system. You develop a series of rules to follow, and then anyone, a clerk, for example, can follow them. And the rules are always consistent. You'll probably still want to get a credit application with trade and bank references, of course, but there's probably no need to check that information with a system like this. You simply plug the name of the business into their web site, and a score is generated instantly, based on your rules. Pricing for the product is $13 to $14 per credit check, and can get as low as $7 to $8 with high-volume customers. The set up fee is $5,000. That includes support to help you set up your rules. Experian will give you a basic template that you can tweak to your heart's content based on your knowledge of your customer base and your company's risk appetite. Also, remember that the system generates a score between 0 and 100. It'll be up to you to translate a score into a particular credit line based on your risk appetite. For example, you might decide that you are comfortable setting a limit of $50,000 for any business with a score of 95 or higher.
Applications Beyond Straight Credit
Once you've done this, of course your initial application will probably be from a credit standpoint. But you can also use this from a customer service perspective. Suppose, for example, a potential new customer submits an order for $25,000, and the system spits out that the customer's score allows it to have a $50,000 credit line. You can immediately notify the customer (and your sales department) that it is entitled to a $50,000 credit line, should they wish to purchase more. How often does your sales department get that kind of message from you now? In addition, you can use this system to up-sell a customer. The default offering is that they get the on-screen decision. Is a management report that's available on a daily basis, and a monthly report that's e-mailed out shows all the inquiries and the decisions. To find out about this product, contact your Experian rep or go to the web site at: https://www.experian.com/b2b. Or, contact Richard Quintana, at rick.quintana@experian.com.
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