Callcredit Blog

Can’t pay or won’t pay? The customer’s view

Collections & Recoveries

The Bank of England warned in September that a sharp rise in interest rates and unemployment could cause UK banks to lose £30bn on credit card, personal loan and car finance lending. However credit and debt are not just about figures but about real people. To help collectors understand debt from the customer’s point of view, we’ve brought together what we have learned from debtors who have faced repayment difficulties.

Very few people intentionally get into debt. Most simply get caught up in a ‘perfect storm’ of circumstances which ultimately leads to harder and harder struggles to make payments, until eventually it becomes impossible. Debtors have often told us that it wasn’t that they didn’t want to make the repayments. They just couldn’t.

In recent years, credit has been easy to get and even with the recent base rate rise, interest rates have been at a record low for many years. That has been good for borrowers – but only in the short-term, as they soon find out. When credit eventually gets harder to come by, or when introductory rate offers expire, their problems can just get bigger.

Customers tell us what makes an enormous difference, however, is the attitude of the company they owe money to.

In the opinion of borrowers, the best lenders never let the problem get to the stage where it feels – for the lender or their customer – too late for anything to be done. If a customer spots a problem, they admit that it’s easy for them not do anything about it. But if the lender spots it too, and flags it up, it stops the customer ignoring it.

To do that, lenders need to know about all a customer’s debts: credit cards, overdrafts, and any other borrowings. Customers have told us that generally, they are happy for lenders to have this information. In fact, they would rather lenders know more, so they can help more if need be.

When a developing issue is spotted, what the lender does next also makes a difference in the customer’s eyes. They don’t want to be hounded. They want to be helped.

When you’re in debt, customers tell us, you often feel there’s nothing you can do about it – because you don’t know what the options are. The people who gave them credit in the first place do, but they are the last ones most customers would think of asking for help.

What customers tell us doesn’t help is if they are given more credit when they are already having trouble repaying the debt they’ve got. Automatic credit limit increases are, in the customer’s words, “just like digging a deeper hole.”

Even when a customer realises they’ve got to address the issue, and need to talk to someone, sometimes the last thing they want is a face-to-face conversation. Even a phone call can be tough. Getting in touch via the internet would be far more preferable, and customers find it hard to understand why there’s 24-hour online banking available, but no similar facilities around loans and debt.

As the experiences of many customers show, the most successful lenders are those who are proactive, and who always remember there are real people behind every debt. Being proactive requires accurate, easily accessible internal and external data which can be leveraged to identify ‘at risk’ customers.

The Callcredit Cosmos Data Hub, for example, provides access to industry-wide income data to identify high debt-to-income ratios. It highlights delinquency such as missed mortgage payments and CCJs, and flags up high-cost credit such as payday loans. It also provides data on any recent drop in current account activity, on problem debt, and several other at-risk identifiers.

The Callcredit Cosmos Decisioning platform makes accurate, automated real-time rules-based decisions, while Callcredit Cosmos Interactive incorporates all communication channels into a single view of customer contact and activity – so your contact centre agents have all the information they need to provide a consistent best-in-class customer service experience, however a customer makes contact.

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