SAN JOSE, Calif. -

While the Office of the Comptroller of the Currency acknowledged vehicle installment contract delinquencies are are at “manageable” levels now, FICO’s analytic team recently offered a pair of recommendations to help finance companies protect profitability in case those conditions deteriorate.

The first recommendation FICO shared in a recent blog post was how finance companies should identify customers likely to become delinquent and take preemptive action.

“By taking a proactive and analytic approach to customer management, auto financing sources can prepare for the likelihood that certain customers may go delinquent and require greater attention,” FICO said.

“Understanding who these customers are, based on their behavior and risk profile, and then taking informed actions to support the relationship can be mutually beneficial,” analysts continued.

“Financing sources will see increased profit with reduced risk. Borrowers will feel supported and avoid a negative brand experience,” they added.

Next, FICO also suggested that finance companies leverage collection treatments that maximize the value of resources and other operational expenses.

“Predictive analytics can be used to identify the most effective recovery programs and get debtors back on the road to repayment,” FICO said.

“Applying risk-based strategies has proven successful to increase the amounts collected; they also keep operating costs down by proportionally focusing system treatments — including letters and collector staff efforts — on rewarding activities,” analysts continued.

“Analytic segmentation can identify customers likely to self-cure so that costly resources remain focused on accounts that will benefit from action,” they went on to say.

More recommendations and commentary from FICO can be found here.