Are lenders seeing all the distress signals?

Already well-established within the UK credit industry, data sharing has proved a highly rewarding tool for responsible lenders for more than 30 years. However, with the global financial meltdown of the past few years affecting most household incomes, access to timely, quality data from some of the UK’s largest creditors, combined with enriched consumer information, means it’s critical for a 360 degree view of a customer’s overall financial situation meaning you can see any financial warning signs. Paul Speirs, Head of Data and Business Development at Experian discusses how developments in consumer credit information are vital to spotting customers who are or could potentially be showing early signs of distress.

Although it is not always possible to anticipate how a customer may be impacted by a life-changing event such as redundancy or a pay reduction, the additional data obtained and shared by Experian allows lenders to identify those who may be showing early signs of distress, and those who would  fall into financial stress should their circumstances change. By knowing this information, quick and responsive lending decisions can be made to manage risk at an individual customer level.

The possibilities for the combination of data are massive and Experian are constantly looking for new ways to build an even better 360 view of customers.

Non-traditional credit commitments, such as utility bills, insurance, television, phone and broadband deliver an even fuller picture of consumers and their commitments. Analysis shows that by identifying the lazy payers (customers who can afford to pay but don’t) utilities providers can reduce bad debt by up to 25% by using credit assessment in their operating systems.

New data from new applications such as insurance, where a person must disclose their current address for their insurance to be valid, can identify where a person is currently living, even if they continue to use their previous home as their postal address. Generating more credit information and history from any undisclosed addresses by the consumer makes sure they are not hiding any debt at previous addresses.

Approximately 70% of households own their own home and in most cases an individual’s property is their largest asset.1 By combining, confirmation of property ownership, property value data with financial data a homeowner’s equity and loan to value figures can be calculated. When cross matched with credit scores or property information, customer management activity can be targeted on only the customers who can afford further lending or proactively managing customers who could easily go into arrears, demonstrating adherence to responsible lending guidelines and increasing significantly the value of these customers to lenders.

Tracing can act as an important tool in enabling lenders to make contact with customers. In an increasingly mobile world, consumers can now have up to nine telephone numbers, including multiple mobile, work and home contact numbers. Collections hit rates can rise from 10-15% to 70% of requests helping make contact and settle arrears much faster than ever before.2

A further innovation in the use of behavioural data sharing such as credit card activity and income vs. out-goings; offering even more in depth information on a customer’s spending behaviour.3 This adds an extra layer of consumer understanding helping predict those who may be showing signs of distress should their future circumstances change.

Intelligent, dynamic use of quality, timely and plentiful data can uncover distress signals that would otherwise be missed. Experian has proved a typical bank could make a saving of £7.5 million by using additional information available from Experian’s credit Bureau.Experian is constantly searching for innovative ways of gathering more credit information to ensure lenders can see all the distress signals and put better credit decision strategies in place.


Paul Speirs

Paul is the Head of Data and Business Development at Experian. He has directly managed the core bureau database strategy for the last 16 years, developing this into an industry leading asset.

During his career at Experian Paul has managed the core team responsible for the processing of all data within Experian’s credit bureau, aiming to ensure that they are acknowledged as market leaders in terms of the depth and breadth of their data.



1. Futureproof – Summer 2011
2. Futureproof – Summer 2012
3. The UK cards association – Behavioural data sharing – Credit Collections and risk: December 2008.
4. Futureproof – Autumn 2010