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Identifying and addressing issues before they become problems

TransUnion today announced the Role Rate Model, its newest solution to the market to help the credit industry effectively manage risk.

TransUnion's Roll Rate Model is used to predict the likelihood of a consumer improving or worsening from their current arrear status within the next 3, 6, or even 12 months.

TransUnion's Roll Rate Model is specifically useful in ascertaining the probability of which accounts might go into collections or assist in identifying consumers that might be open to special marketing offers or assistance from a creditor to help improve their current arrears status. The solution is available as a customised model

As delinquent accounts over time remain the same, improve or worsen, the shifting or movement to a higher or lower level of risk is defined as a "roll."  A forward roll is movement into a higher level of delinquency in the subsequent month.

This is considered worsening delinquency. A backward roll is movement to a lower level of delinquency in the subsequent month. This is associated with payback and reflects improving delinquency terms.
 
The Roll Rate Model leverages several data sources in its analysis such as performance or historical data provided to TransUnion by the credit granting community as well as Payment Profile Information (Bureau Credit Characteristics) and Consumer Header Information.

The model consists of four account management models to effectively manage accounts in a range of circumstances, depending on the desired outcome of the customer.

"Often, much focus is given to account acquisitions and collections, but organisations can reap valuable benefits by investing time in analysing the account management function."

"Account management entails more than simply overseeing existing accounts; it should involve analysis around credit limits and identifying and addressing issues before they become problems or write-offs," said Dr. Mohammed Razzak (Pictured above), Executive Director: Analytics, from TransUnion Analytic and Decision Services (ADS) in South Africa.