Today’s consumers expect companies to present them with personalized offers, which requires access to the most timely, relevant data. For years, savvy lenders have relied on prescreening, or using credit data to reach qualified consumers with the right offers at the right time. But for as much as lenders agree on the importance of prescreening—and they do; lenders generated more than 10 billion prescreen offers in 2020 alone—there are still differing opinions on how to get the most out of this time-honored practice.
That’s because prescreening is not binary. It’s not a matter of simply “doing prescreening” or not. There are many ways to approach prescreening—some far more effective and sophisticated than others—and it’s important to find strategic partners that can offer the right data, and right analysis, to help you reach your lending goals. The following three questions can help guide your conversations with prospective data providers to find the best prescreen partner for your institution.
1. Do they have multi-bureau access?
At its best, prescreening helps you validate if a customer is a good match, if they’re in the market, and what they’re in the market for. And the only way prescreening can truly be at its best is through multisourcing data from at least two of the three major credit bureaus.
It’s not as simple as finding the bureau with the “best” data and doing all your business with them. Because if you are only working with one bureau, there is no “best.” One is not enough.
In fact, among our own clients, Deluxe has found that engaging with a second bureau will give you 10% lift in rate of response—regardless of what that bureau is. And those that engage a third will see 10% lift beyond that.
The limits of working with a single bureau: Any single credit bureau collects and processes marketing-stage data on up to 2 billion trades every day. For example, let’s say Bureau A collects, processes and consolidates batch data on 2 billion trades overnight. That much information can naturally get a little messy. It’s possible to have multiple files for a single person within one credit bureau (these are called fragmented credit reports, or frag files). So you may see what looks like information on three separate individuals, but it’s actually just one person. Or the credit picture you get of an individual isn’t accurate.
The risk of working with a single credit bureau: Because of the volume of data and the short time frame, the credit matches Bank X gets from Bureau A may omit tens of thousands of matches, or indicate that potential matches are better qualified than they actually are.
2. Do they practice good (data) hygiene?
You might be thinking, “20% lift sounds unbelievable. If you told me 5% or even 10% I’d believe you, but why is it that much?” It’s actually pretty simple, and it all comes down to understanding how credit bureaus work, and the role of cleansing and standardization methods in refining bureau data.
The problem with messy data: As we mentioned earlier, fragmented credit reports are a common occurrence within a bureau’s data, simply because of the huge scope of what they’re collecting and the speed at which they deliver it to clients. And each of the multiple frag files for a single person could have different credit scores associated with it, because each file is made up of different bits of data. So if Bank X is working only with Bureau A, they’re missing out on volume of potential customers, and possibly being told a customer is better qualified than they actually are.
Why clean data leads to lift: But if Bank X’s prescreening partner also sources data from Bureau B and even Bureau C, they can compare the data sets against each other to help determine when a frag file actually represents another individual. By sourcing prescreen data from multiple bureaus, the partner can identify and consolidate those duplicative fragmented reports. As a result, Bank X now knows how many people they’re actually targeting, and can be confident that those people actually qualify for Bank X’s offers.
In other words, multi-sourcing lets you not only expand your prospect pool, but also make that expanded pool more accurate and worthwhile. That’s why lenders who engage a second or third bureau can expect upwards of 10-20% lift in rate of response.
3. Are they willing to invest in your success?
In prescreening as in life, a good partner will support your success. The main point of hesitation many banks have in sourcing prescreen data from a second or third bureau is the cost, but the right data provider will be willing to share in those expenses. In evaluating potential partners, ask whether this is something they do for clients. When the potential benefit is this great, helping you succeed should be their top priority.
Why the investment is worth it: While it’s true that working with multiple bureaus likely means a higher up-front cost, the lift you’ll see is so significant, you really can’t afford not to. That’s why we believe a true partner will help you access what you need and not charge you prohibitively for it. Ultimately it’s better for all parties when there is more access to more data as early as possible.
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