Article Abstract:
Risk-based pricing has become an integral part of improving customer relations in the credit industry. The application of risk-based pricing begins with evaluating the credit risk of existing and possible customers based on credit reports, demographic data, customer information files, and creditor and behavior scorecards. Risk-pricing methods are then selected and offered to low risk customers. These may include granting higher credit lines at low interest, providing ATM services and different payment terms for real-estate secured transactions, preventing attrition and offering lenient collection methods and forebearance agreements. Effective risk-based policies are those that can meet customer demands and the company most successful in this area is Household International Inc due its ability to determine and provide its customers' needs.
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Article Abstract:
Credit risk management has steadily evolved over the years as conditions in the market continually transform. Initially, risk management tools and strategies were used exclusively for account acquisition purposes. At present, they are still being employed in account acquisition but are also being utilized in more applications. For instance, these credit risk management tools and strategies are being used for credit line management, activation and attrition modeling, collection action management, fraud detection, and bad debt recovery. Regardless of the area for which risk management strategies are being used, the element of 'balance' always emerges. Risk management involves the balance of sales and bad debt; active accounts and marketing costs; delinquency and collection costs; and fraud prevention and customer relations.
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Article Abstract:
Risk management has not been a major concern in the telecommunications industry. Local telephone companies have been largely impervious to credit risks because their market monopoly has given them the power to disconnect telephones lines if customers fail to pay. In addition, they could write off uncollected payments and could request pay hikes to offset their costs. Long-distance companies have similarly been unconcerned about risk management principles even though greater competition has made it necessary for them to continually try to attract and retain customers. These are all about to change as telephone increasingly recognize the importance of risk management. It can discourage efforts of many individuals to obtain free service and enable companies to address credit concerns early.
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