In today’s economy, credit card issuers are focused on reducing their credit risk exposure. The first line of attack against this risk is three-pronged: close accounts, prohibit authorization among high-risk accounts, and lowering credit lines for potentially risky customers.

This third option—managing credit lines—is both the greatest area of opportunity and the one in which it is easiest to misstep.

Consider these counter-acting forces at play when a good customer’s credit line is lowered: 

• Unpleasant customer experience.
• Benefit to the issuer in terms of saving a significant amount of bad debt.
• The customer does not have a credit line commensurate with a large number of purchases, so the issuer feels the pinch.

The effort to solve these issues involves a deep understanding of whose credit line is being lowered, the likelihood that this customer will charge off, the estimated charge-off amount as well as the reciprocal, the likelihood of the customer remaining in good standing, and the value of the estimated lost revenue.
 

What We Do

Our team is experienced in building Credit Line Decrease Optimization Solutions. This work involves proficiency in building statistical targeting models and segmentation schemes, detailed cash flow models and expertise in running simulations and optimization techniques.

We understand the business, the data that is needed to build this system, the design that will be most successful, and the process that needs to be followed so that this can become an ongoing best practice for the client organization.

What We Deliver

• Identify the right customer for a credit line decrease.
• Significant reduction in credit risk exposure and capital requirement.
• Identification of segments that need to be excluded from credit line decrease initiative.
• Thoughtful communication plan to educate the impacted customer and increase potential of a long-term relationship.
• Track the performance of the program.