ATLANTA and CHICAGO -

Both Equifax and TransUnion recently rolled out new solutions aimed at helping collection agents get better estimations of potential recovery amounts from delinquent debtors.

Both companies launched these new tools during the recent Debt Buyers Association Conference held earlier this month in Las Vegas.

TransUnion Believes Two New Products Deliver Strong Results

TransUnion revealed two new recovery models — Recovery Propensity Score and Recovery Yield Score. The company explained both of these scores were developed using TransUnion’s freshest consumer data set and advanced modeling technology, allowing customers to supplement their own internal data into the scores to better target those accounts most likely to pay, while limiting resources expended on debtors unlikely to pay.

Officials highlighted the TransUnion Recovery Propensity Score is designed to use the most recent data available to reflect dynamic economic conditions and predicts the likelihood that an account will pay $50 or more within 12 months. Meanwhile, they also indicated the TransUnion Recovery Yield Score can complement the Recovery Propensity Score by including components identifying debtors likely to pay more, enhancing recoveries in the most liquid populations.

In thorough and comprehensive validation tests against the previous recovery model, TransUnion insisted the scores delivered impressive results.

When testing the scores on medical debt accounts, the company discovered the new models scored 29.1 percent more accounts due to less restrictive minimum scoring criteria. They also increased total dollars paid by more than 12 percent within the top 25 percent of scores.

Through other validation tests, TransUnion said it determined liquidations for student loan debt increased by over 32 percent, demand deposit account liquidations increased by 12 percent and bankcard liquidations increased by 9 percent within the top 25 percent of each population segment.

“TransUnion Recovery Scores allow collectors to spend more time recovering debt and less time pursuing uncollectable accounts,” stated Tom Jordan, vice president of solution sales at TransUnion.

“While traditional models focus on recovery incidence, TransUnion Recovery Scores dig deeper, determining accounts which will yield the highest recoveries for your bottom line,” Jordan added.

Equifax Solution Aims at Modifying Debt Recovery Process

Meanwhile, Equifax contends that its new recovery scoring solution, Recovery Navigator, is the industry’s first tool to leverage both credit and income data to predict the likelihood that a charged-off account will make a payment within 12 months.

Using this solution, Equifax believes collection entities and debt buyers can identify accounts with the highest propensity and ability to pay, improve recovery margins and enhance debt-buying decisions.

Equifax reasoned that continued high unemployment and escalating consumer bankruptcies underscore the critical need for its new solution. Faced with these economic pressures, Equifax thinks companies that continue with a “business as usual” approach will find it challenging to make effective segmentation and prioritization decisions.

“To compete effectively, businesses must be able to assess debtors’ ability and willingness to pay,” Equifax officials declared.

As a result, the company said it developed Recovery Navigator by analyzing debt patterns and other variables across a number of industries, especially credit card portfolios. Based on its research, Equifax asserted that it found a highly predictive solution that combines its extensive credit data with proprietary debt-to-income analytics and custom modeled income data.

Leveraging these differentiated data assets, Recovery Navigator can calculates a numeric score to predict ability to pay and determine the collections potential of a debt portfolio under consideration for purchase. Scores range from 1 to 999, with higher scores representing a greater likelihood of collection.

Officials explained the incorporation of Equifax’s unique income data can make Recovery Navigator an effective solution across all market segments, especially the thin-file population. They also noted the solution also can integrate seamlessly with existing collections products, enabling customers to correlate the probability of payment to the collection strategy.

With this insight, Equifax emphasized that businesses can improve the management of debt portfolios by refining treatment strategies and prioritizing collection spend based on key metrics, such as capture rate of paying accounts and dollars collected.

“Recovery models must rely on more than credit data to provide a complete picture of portfolio collectability,” conceded Joel Milne, vice president of U.S. information solutions for Equifax.

“Recovery Navigator is designed to outperform other solutions in the market by leveraging unique data assets that are critical when evaluating debt portfolios and their potential ROI,” Milne continued. “Equipped with an industry solution like Recovery Navigator, businesses can benefit from enhanced performance throughout the collections life cycle.”