ATLANTA-Delta Community Credit Union here has cut in half its consumer loan delinquencies since October, 2010, when collectors began using a debt-recovery solution that places the most collectible accounts at the top of their queue.
"The very month we deployed Collection Advantage, we went from a 1.25% delinquency rate to 1.06% and have continued the downward trend to .63% now," said Lynn Hayhurst, VP-recovery services at the $4-billion CU.
The industry average is 1.29%, and Delta Community hovered at 1.25% for the first three quarters last year, she said.
Collection Advantage, offered by Experian, uses credit-based scoring, consumer contact data and analytics to help Delta Community identify which accounts have the greatest and least recovery potential.
Collectors feel more confident because of the solution, Hayhurst suggested. "I think if you start a collector's day with the highly collectible accounts upfront, it gives them positive collection ability. That helps the collector build enough momentum to collect those harder accounts during the remainder of the day."
To identify accounts as low or high propensity to pay, Experian developed RecoveryScore. The scoring model takes credit bureau variables and applies regression analysis to "maximize the difference between low and highly collectable accounts," explained David Ingram, director of collections, Experian.
Collectors now access higher quality information when they call a member, Hayhurst said. "They see credit scores, bankruptcy tendency scores and trade lines. It's almost a mini-credit report at their fingertips."
The Collection Advantage "mini-credit report" is more efficient than directly pulling a credit bureau report, she added. "With our volume of delinquencies, doing a credit bureau on a member would not be feasible."
Better information has helped the seven Delta Community collectors nearly double their call capacity, Hayhurst said. One collector can make about 100 calls per day. Prior to Collection Advantage, each collector averaged about 50 calls per day.
Collection Advantage is smoothly interfaced with Delta Community's existing collection technology, Akcelerant Framework SOLUTION.COLLECTION, Hayhurst said. "The collector doesn't even know that Collection Advantage is working to set up the queue in Akcelerant."
Customization Available
Delta Community can customize the interaction between Collection Advantage and Akcelerant, she continued. For example, DCCU sends a monthly file to Experian requesting that Collection Advantage flag all delinquent loans with a recovery score of less than 600. "Those are the accounts with a low propensity to pay. We can try to assist them." Experian returns the data to Delta Community to load into Akcelerant, and queues are automatically set to use the data.
Credit unions can access Collection Advantage via various accounts receivables platforms in fixed-field batch file, XML and web browser-based formats, Ingram said.
Delta Community holds a $2.5-billion consumer loan portfolio, including home equities, with about $3.6-million in the 60-day delinquency bucket and $6.7-million out 30 days, said Hayhurst. Consumer loan volume has grown 1.13% since September.
When Experian suggested that Delta Community place highly collectible accounts at the top of the queue, Hayhurst was skeptical, she said. "I thought we should put those with less propensity to pay first. So I did that, but collectors who had the greatest propensity to pay at the top always collected more. I've done collections for a long time, and this surprised me."
Hayhurst promised "dinner and drinks" for the collections team when delinquencies drop to .5%, said Hayhurst. "With current consumer confidence and desire to pay off debt and Collection Advantage working for us, I think it's very possible for us to get under .5%."
