Fair Isaac recently announced changes to its credit scoring system, named FICO 9, which is welcomed news for consumers and lenders. A recent article in the Wall Street Journal entitled, “Changes Could Lead to More Bank Lending, Easier Credit for Some Consumers,” described changes in how the most widely used credit score in the U.S. is calculated and how it will likely make it easier for millions of Americans to get loans.
Fair Isaac will begin rolling out the new scoring model to credit bureaus this fall and to lenders later this year. The new model for FICO scores loosens standards without overstating the creditworthiness of borrowers. This revamped FICO scoring system is expected to “…expand banks’ ability to make loans for people who might not have qualified and to offer a lower price [for others],” said Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association, a trade group.
Direct mail continues to be a strong tool for marketers, especially in the area of customer acquisition. The financial services vertical mailed more than 9.7 billion pieces of mail during the last 12 months (September 2013-August 2014), increasing 6% during the last six months according to market research firm Comperemedia. As lenders begin to use the FICO 9 scoring system in their evaluation of potential borrowers, a new group of consumers will become more attractive to potential lenders.
With financial service direct mail volumes continuing to grow at such a rapid pace, lenders should take advantage of the effectiveness of direct mail while targeting these potential new borrowers. Here are some recommendations for making financial service direct mail campaigns more successful:
- Use an eye-catching format. For example, use a “pre-approved” check in the dollar amount of the potential loan with your phone number as a call to action.
- Engage in cross-channel marketing by directing an applicant to the lender’s call center or website. Better yet, set up a PURL or specific landing page with content tailored to each recipient’s needs.
- With mail volumes likely to increase for lenders, use a sophisticated postal optimization strategy to manage postage costs as much as possible.
Feel free to contact us if you have any questions regarding the best way to increase the effectiveness of your offers. We’d love to be part of your success.
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