Five reasons to prescreen customers

Prescreening is a highly effective marketing process used by savvy marketers in the lending and banking industry every day. It involves making unsolicited offers of credit or insurance to consumers who might be in the market. Basically it allows you to compile a list of consumers who are likely interested in obtaining a mortgage, that have a certain credit score, so that you can reach out to them with an offer of your own.

This isn’t a new practice, in fact it has a long history that peaked in the 2000s.

While prescreening fell off during the Great Recession, it has clawed its way back to prominence again and is now considered a very important piece of marketing today for banks and lenders.

The term prescreen has different names for different audiences. When its consumer facing, it’s called “pre-approved” or “pre-qualified.” Consumers will understand that to mean they’ve been vetted and have a firm offer available to them. Alternative finance platforms call it “curation” while aggregators think of it as “qualification.”

Watch this video featuring our own Rich Walker as he explains what prescreening is and how it can benefits your company as you look to target the right people. If you want to learn more about how Deluxe Marketing Services and Datamyx can help, contact us today and let us know you read this blog.

Regardless of what you call it, prescreening allows your organization to use unique and actionable data insights to make a “right-time, right-offer” message to the consumer. But you may still be wondering why you should go through the extra effort to prescreen and what the benefit will be for your organization. While there are many benefits to prescreening your prospects, here are the five most important reasons why you have to prescreen to stay ahead of your competition:

1. It works. First and foremost, prescreening uses the best data available to match offers from a lender and people who need that product. This is easily the most important benefit of the practice. Savvy lenders can use prescreen in many channels (I’ll get to this below).
2. Underwriting matters. When you prescreen, you have the chance to assess credit before you make the offer. If you are lending money, there is nothing more important than understanding a borrower’s likelihood to repay the loan – and then designing the terms appropriately. To be blunt: prescreening is the best environment for managing credit risk because it starts with credit data.
3. Its Written in black-letter. Prescreening is explicitly provided for in legislation (Fair Credit Reporting Act, 15 U.S.C. § 1681). It is not a case where the law doesn’t say you can’t do it: if you are a chartered institution – or acquiring for a chartered financial institution – and you have permissible purpose, you are given the authority to prescreen. In return for looking at a consumer’s credit data without permission of the individual, the lender commits to approving the application, regardless of what the back-end report says, except in certain rare circumstances. This fairness of treatment is a big reason why the practice has endured. But before you try to take this on yourself, you should be very familiar with the rules or partner with an organization that knows what they are doing.
4. Offer the right product. Nothing frustrates customers more than getting bombarded with letters, post cards, and emails with irrelevant offers for products they don’t need. Prescreening your customers and prospects allows you to know not only when they are interested in a product, but the product they are in the market for as well.
5. Prescreening need not be limited to mail only. FCRA does not dictate that firm offers be communicated in direct mail. It works quite well as a channel, but it need not be the only way to communicate firm offers.

Prescreening is the most appropriate way to target new loan customers. It helps you validate if a customer is a good match, if they are in the market, and what they are in the market for. Your customers and prospects get better, more relevant offers and you increase the likelihood of getting the business. It is time-honored and battle-tested.

This content is accurate at the time of publication and may not have been updated.