For bankcard and auto lenders looking to make offers to consumers, timing is everything. Make an offer too early and they’re likely to forget about you when their actual need arises. Make an offer too late and you’ve missed the opportunity—and another lender has probably landed a happy new customer.
Finding the right triggers and insights into the correct timing to meet consumer needs is the key to making sure your efforts are not wasted.
Data about extended purchase behaviors can help guide the right offers at the right time. For example, new TransUnion findings show bankcard and auto lenders have an opportunity to leverage behavioral insight from other products—such as mortgage inquiry—which is predictive of increase in bankcard spend and both auto loan and card origination.
This theory was the inspiration behind TransUnion’s recent mortgage inquiry study, Credit Behavior Before and After Mortgage Event. This study focused on mortgage applicants in the prime or better risk tiers with an existing mortgage—those who are likely moving or refinancing. The goal was to understand if consumers really change credit behavior before and after a mortgage event.
The study included 16.7 million consumers who paid off their mortgages and moved with new mortgages or refinanced existing mortgages between Q1 2013 and Q2 2015 and analyzed the behavior of consumers in the prime or better risk tiers who make up the large majority of the mortgage-seeking population. In fact, 89 percent of consumers who took on a mortgage to move into a new home belonged to these risk tiers. Approximately 85 percent of consumers who refinanced their mortgage loans belonged to the prime or better risk tiers.
TransUnion’s research found that consumers applying for a new mortgage are on average 2 to 3 times more likely to initiate an auto loan or credit card account over the next 12 months. As shown in the first chart, many of these consumers open these accounts as soon as one month after their existing mortgage payoff.
While the research confirmed that consumers do change their credit behavior, it also showed behavior contrary to what lenders might believe.
For example, one long-held assumption among lenders is that new mortgage applicants spend less on their credit cards prior to their mortgage closing event—either to ensure their credit picture does not change or simply because they anticipate spending more once they move into their new home.
 The VantageScore © 3.0 risk ranges reviewed in the study were for prime or better (scores of 661+). VantageScore risk tier ranges are as follows: Non-prime = 300–660; Prime = 661–720; Prime plus = 721–780; Super prime = 781-850.