Christmas is a profitable time for most businesses but in particular it is peak for retailers, as customers flock to stores to purchase family presents. Still, with the introduction of expensive and sought-after gadgets like the iPad, gifts are becoming increasingly unaffordable unless signing up to a credit plan – plans which are potentially being acquired too easily by ‘risky’ customers.
The best way for retailers to ensure they only approve low credit risk customers is to sharpen the accuracy of their credit reporting systems. A lot of finance providers make the mistake of basing approvals purely on a customer’s credit history and are oblivious as to how they can assess spending patterns, current credit commitments, fraudulent behaviour and even future indebtedness of individuals.
The profit losses and hassle involved with non-paying debtors can be very serious. Sometimes retailers are willing to settle for a lenient credit authorisation system as they incur more sales. This may seem logical as the stores hit more short term targets but as soon as customers begin to default, avoid payments or even affect the business through fraud – the drop in revenue can come back to haunt the provider.
Luckily, there are cutting edge credit scoring services available for retailers to utilise. Huge customer profiling data is stored and updated daily by credit reference agencies. By using advanced verification tools, these agencies can thoroughly screen a customer on the behalf of any retailer.
In a nutshell – agencies analyse a customer’s previous credit activity plus their current and future living circumstances – all with the intention of deciding on whether the customer’s overall affordability is enough, in order for them to acquire the credit agreement they are applying for.
Such in depth profiling is unachievable through basic credit reports and the advanced tools used by the agencies allow them to rapidly provide results – which is ideal for processing finance agreements in store.