Systems and methods for minimizing effects of authorized user credit tradelines
View Patent ↗Systems and methods for identifying, evaluating, and accounting for effects of authorized user trade lines are disclosed. The systems and methods incorporate use of credit characteristics that describe the nature of authorized user trade lines on a credit file or across credit files, and the influence of those authorized user relationships relative to the non-authorized user trade lines on the credit file in the evaluation of credit risk. Systems and methods incorporating these credit characteristics can be used in identifying any bias in perceived credit risk, in the evaluation of credit risk, or other credit-related evaluation.
1. A method for evaluating the credit risk of an individual or entity associated with a plurality of trade lines, the method comprising the steps of:
identifying using a first computer process executing on a computer processor each of the plurality of trade lines for which the individual or entity is an authorized user;
combining using a second computer process executing on a computer processor at least one characteristic of all said authorized user trade lines to produce an authorized user trade line total;
combining using a third computer process executing on a computer processor the at least one characteristic of all of the plurality of trade lines for which the individual or entity is a base user to produce a base user trade line total;
calculating using a forth computer process executing on a computer processor a ratio between the authorized user trade line total and the base user trade line total, wherein the ratio is indicative of a likelihood that the individual or entity is attempting to misrepresent the risk associated with their credit; and
generating using a fifth computer process executing on a computer processor an alert should the ratio exceed a user-defined amount.
2. The method of claim 1 wherein the at least one characteristic comprises age of the trade line.
3. The method of claim 1 wherein the at least one characteristic comprises balance of the trade line.
4. The method of claim 1 wherein the at least one characteristic comprises credit limit of the trade line.
5. The method of claim 1 wherein the individual or entity is a prospective borrower and the method is performed to determine whether to approve a loan.
6. The method of claim 1 wherein the individual or entity is a party responsible for at least a portion of a balance associated with an individual account within a debt portfolio, and the method is performed as a means of review to determine whether to adjust one or more terms of the individual account.
7. The method of claim 1 wherein the at least one characteristic comprises the total number of active trade lines.
8. A method for evaluating risk across a debt portfolio comprised of a plurality of individual accounts, each individual account having at least one account holder responsible for at least a portion of the outstanding debt associated with the individual account, the method comprising the steps of:
filtering using a first computer process executing on a computer processor the debt portfolio to identify high risk accounts, the high risk accounts comprising individual accounts from among the plurality of individual accounts that meet user-defined criteria, at least one of the criteria relating to trade lines of the at least one account holder for which the at least one account holder is an authorized user;
analyzing using a second computer process executing on a computer processor at least one characteristic of the trade lines of each at least one account holder responsible for a high risk account to determine a result indicative of a likelihood that the at least one account holder is using authorized user trade lines to misrepresent the risk associated with their credit; and
assigning using a third computer process executing on a computer processor a relative risk to the debt portfolio based on comparing total debt in the debt portfolio to total debt associated with those high risk accounts wherein the result yielded by the analyzing step met a user-defined criteria.
9. The method of claim 8 wherein said debt portfolio is comprised of credit card accounts.
10. The method of claim 9 further comprising the step of preventing using a fourth computer process executing on a computer processor the individual account from receiving a credit limit increase when the analysis of that individual account yields a result that meets a user-defined criteria.
11. The method of claim 8 wherein at least one of the individual accounts within the debt portfolio is a loan having at least one debt convention, the at least one debt convention prohibiting the at least one account holder from maintaining more than a certain quantity of authorized user trade lines.
12. The method of claim 11 further comprising the step of generating using a fourth computer process executing on a computer processor an alert if said number exceeds said certain quantity.
13. The method of claim 8 further comprising the steps of:
repeating the filtering, analyzing and assigning steps over time; and
providing using a fourth computer process executing on a computer processor an alert should the said relative risk exceed a user-defined value.
14. The method of claim 8 wherein the at least one characteristic comprises balance of the trade line.
15. The method of claim 8 wherein the at least one characteristic comprises credit limit of the trade line.
16. The method of claim 8 wherein the at least one characteristic comprises the number of active trade lines.
17. The method of claim 8 wherein the at least one characteristic comprises status of the trade line.
18. A method for identifying and evaluating effects of authorized user trade lines on credit scoring, the method comprising the steps of:
obtaining using a first computer process executing on a computer processor data related to credit of an individual;
processing the data using a second computer process executing on a computer processor based on predefined characteristics having a correlation to effects of authorized user trade lines on credit scoring;
outputting statistics using a third computer process executing on a computer processor based on the predefined characteristics;
comparing using a forth computer process executing on a computer processor those statistics to pre-defined limits; and
generating a user alert when the pre-defined limits are exceeded.
19. The method of claim 18 further comprising the step of using the output statistics by computer processor to make at least one business decision.
20. A system for processing data to determine authorized user trade line effects on credit scoring, the system comprising:
a server;
at least one credit database in communication with the server; and
a client device in communication with the server, the client device capable of sending data associated with a consumer, and the server capable of facilitating processing of the data against the credit database based on predefined characteristics having a correlation to effects of authorized user trade lines on credit scoring; the client device further capable of receiving the processed data from the server as an output indicative of the effect of authorize user trade lines on credit scoring of a consumer.
21. The system of claim 20 wherein the processed data from the server comprises a client alert.