WO2001018708A1

WO2001018708A1 - System and method for offering and providing secured credit card products

Info

Publication number: WO2001018708A1
Application number: PCT/US2000/023977
Authority: WO
Inventors: Sheldon F. Hall, Iii; Ivan T. Stoikoff
Original assignee: Capital One Financial Corporation
Priority date: 1999-09-03
Filing date: 2000-09-01
Publication date: 2001-03-15
Also published as: EP1230610A1; US6158657A; AU7097600A

Abstract

A system and method is provided for offering and providing secured credit card products. The disclosed systems and method provide a secured credit card product that is offered to a select group of potential customers. The offer may indicate both the required security deposit and the maximum credit limit that the customer may qualify for in exchange for the security deposit. When each customer response to the offer is received, the actual credit limit for the secured credit card is determined based on the individual's credit history and other credit-related factors. After determining the credit limit, a customer account is established and the customer is notified of his/her new account. This notification may include providing the new account number, credit limit and other pertinent account information, as well as issuing one or more secured credit cards represented with plastic card-like members.

Description

SYSTEM AND METHOD FOR OFFERING AND PROVIDING SECURED CREDIT CARD PRODUCTS

BACKGROUND OF THE INVENTION I. Field of the Invention

The present invention is related to credit card products and to systems and

methods for offering and providing such products. More particularly, the invention

relates to systems and methods that minimize risk to credit card issuers and increase

the level of response to offers for secured credit card products. π. Background and Material Information

Credit card products have become so universally well known and ubiquitous

that they have fundamentally changed the manner in which financial transactions and

dealings are viewed and conducted in society today. Credit card products are most

commonly represented by plastic card-like members that are offered and provided to

customers through credit card issuers (such as banks and other financial institutions).

With a credit card, an authorized customer or cardholder is capable of purchasing

services and/or merchandise without an immediate, direct exchange of cash. With

each purchase, the cardholder incurs debt which the cardholder may thereafter pay

upon receipt of a monthly or otherwise periodic statement. In most cases, the

cardholder will have the option to either fully pay the outstanding balance or, as a

matter of necessity or choice, defer at least a portion or the balance for later payment

with accompanying interest or finance charges for the period during which payment of

the outstanding debt is deferred.

The spending power of a credit card (i.e., the total amount of funds available to

the cardholder at any particular time for making purchases) is typically limited to a particular amount predetermined by the issuer of the card. This amount is commonly

referred to as the "credit limit" of the credit card. The size of the issuer-imposed

credit limit is generally based on a number of non-exclusive factors, the most

important of which are often the cardholder's earning capacity and the cardholder's

credit history. When purchases are made or debts incurred with the credit card, the

available portion of the credit limit is reduced by the purchase or debt amounts. In

addition, interest and/or finance charges are also subtracted from the available portion

of the credit limit on a periodic basis. The total debits on a credit card are referred to

as the "outstanding balance", while the remaining or available balance of the credit

limit is typically called the "available balance" and reflects the dynamically adjusted

current spending power of the credit card. The cardholder may increase the available

balance up to the credit limit, by paying to the issuer (or its representative) the entire

outstanding balance or a fractional portion thereof.

Credit cards are typically structured according to one of two general varieties:

unsecured or secured. Of these two varieties, unsecured credit cards are perhaps the

most common type of credit card product. Unsecured credit cards are aimed at

customers with excellent or good credit history, and are distinct from secured credit

cards in that they do not require any type of security deposit from the cardholder. The

issuer of an unsecured credit card may offer potential customers a particular unsecured

credit card by disclosing the terms and conditions of the credit card product (e.g.,

annual fees, interest rate(s) and finance charges, etc.) and the credit limit of the credit

card that may reach a stated maximum upon qualification. When a credit card

application is returned by a customer, the amount of the credit limit is generally determined by the issuer based on various factors, such as the customer's credit history

and earning capacity.

Secured credit cards are an alternative to unsecured credit cards and are

designed for customers with poor or bad credit history. Secured credit cards differ

from unsecured credit cards in that they require a security deposit from the customer

before a credit card account can be established. There are generally two types of

secured credit card products: ratio products and fixed line products. Ratio products

are credit cards that are offered to potential customers with a variable credit limit that

is based on an indicated ratio or multiple of a security deposit to be provided by the

customer. In response to an offer from the credit card issuer, the customer may

choose a security deposit ranging between a stated minimum and maximum amount to

obtain a desired credit limit. In contrast, fixed line products are secured credit cards

that are offered to potential customers with a fixed credit limit and a predetermined,

security deposit amount. The offer for a fixed line product can indicate both the

required security deposit amount and the fixed credit limit. Since the issuer of a fixed

line product does not vary the credit limit for potential customers, the customer can

only receive the indicated credit limit in exchange for providing the security deposit.

Although secured credit cards have enabled credit card issuers to provide

credit card products to individuals with poor credit, these types of credit card products

suffer from several drawbacks. For example, the main disadvantage of ratio products

is that certain customers may seek the maximum credit limit by providing a larger

security deposit, but still default on their payments. As a result, a credit card issuer

may be exposed to unsatisfactory levels of financial risk. While such risk can be minimized by providing fixed line products, these types of secured credit card

products typically do not receive a good level of response, since the fixed credit limit

is normally lower and/or determined based on the entire group of potential customers

that receive the offers from the issuer. This results in a fixed credit limit being offered

to certain individuals that could potentially qualify for a higher credit limit.

In view of the foregoing, there is presently a need for an improved system and

method for offering and providing secured credit card products. For example, a need

exists for a secured credit card product that minimizes the risk to credit card issuers

while attracting a larger number of potential customers having a poor or bad credit

history. There is also a need for an improved system and method for offering secured

credit cards that provides a level of response that is comparable to that of unsecured

credit cards.

SUMMARY OF THE INVENTION

Systems and methods consistent with the principles of the present invention

address the needs and drawbacks of past attempts by combining elements of both

secured and unsecured credit card products. More specifically, systems and methods

consistent with the invention provide a secured credit card product that is offered to a

select group of potential customers and that includes a stated, maximum credit limit

that a customer may qualify for after responding to the offer. The actual credit limit is

determined not at the time of sending the offer, but after the response from the

customer has been received.. Ultimately, the actual credit limit will be determined

based on each customer's credit rating at the application stage. As a result, the secured

credit cardholder is provided with a credit limit that is more commensurate with their credit history and that is not restricted by any predetermined ratio or fixed, group

amount. Further, systems and methods consistent with the principles of the present

invention provide an increased response level by offering a secured credit card with a

required security deposit and a stated maximum credit limit for which the potential

customer may qualify.

According to an aspect of the invention, a list of potential customers is

generated for each secured card product and offers are sent to each potential customer

on the list. The offer may indicate both the required security deposit and the

maximum credit limit that the customer may qualify for in exchange for the security

deposit. When each customer response to the offer is received, the actual credit limit

for the secured credit card is determined based on the individual's credit history and

other factors, such as number of accounts, earning capacity, debt-to-income ratio and

length of employment. After determining the credit limit, a customer account is

established and the customer is notified of his/her new account. This notification may

include providing the new account number and other pertinent account information, as

well as issuing one or more secured credit cards represented with plastic card-like members.

In determining the list of potential customers, an analysis may be performed to

determine whether the customer poses an acceptable level of risk and whether the

customer can provide an acceptable level of profitability. Systems and methods

consistent with the present invention may receive data from one or more financial

clearinghouses to generate a list of potential customers. This data may be analyzed to

perform a primary risk analysis of potential customers and to arrange potential customers into groups based on risk assessment. A separate determination may then

be made as to the type of secured credit card product to offer each group. Thereafter,

the secured credit card offers may be sent to each potential customer.

When a response to the offer is received from a customer, the issuer may re-

evaluate the customer's credit information before determining the actual credit limit

for the new account. Systems and methods consistent with the invention may receive

the response to the offer from a customer and perform a secondary risk analysis of the

customer to determine the credit limit for the secured credit card product based on, for

example, additional information received in the response. Each customer's account

may then be established in accordance with the determined credit limit and a

notification can be sent to the customer to indicate the new account information.

In accordance with an aspect of the present invention, a method is provided for

offering and providing a secured credit card product. The method preferably

comprises: identifying potential customers for a secured credit card product; sending

an offer for the secured credit card product to each potential customer, wherein the

offer includes a stated security deposit and a stated, maximum credit limit that a

potential customer may receive for the secured credit card product upon qualification;

receiving each customer response to the offer for the secured credit card product; and

establishing, in response to each received customer response, a customer account for the secured credit card product.

In the disclosed method, the step of establishing may comprise providing

customer credit data and determining, based on the customer credit data, a credit limit

for the secured credit card product associated with the customer account. In addition, the method may further include notifying a customer of the customer account and the

credit limit for the secured credit card product associated with the customer account.

The disclose method may also include receiving a plurality of customer credit

data from at least one financial clearinghouse and determining a list of potential

customers for the secured credit card based on the plurality of customer credit data. In

such a case, the step of identifying may further comprise arranging the list of potential

customers into a plurality of groups and determining a secured credit card product to

offer potential customers in each of the groups.

In accordance with another aspect of the invention, a computer program

product is provided for offering and providing secured credit card products. The

computer program product may comprise: computer-readable media having computer-

readable code, wherein the computer program product comprises the following

computer-readable program code for effecting actions in a computing platform:

program code for identifying potential customers for a secured credit card product;

program code for determining an offer for the secured credit card product to be sent to

each potential customer, wherein the offer includes a stated security deposit and a

stated, maximum credit limit that a potential customer may receive for the secured

credit card product upon qualification; and program code for establishing, in response

to each customer response to the offer, a customer account for the secured credit card

product.

In the disclosed computer program product, the program code for establishing

may comprise program code for determining, based on customer credit data, a credit

limit for the secured credit card product associated with the customer account. Further, the computer program product may also comprise program code for

generating a notification to a customer of the customer account and the credit limit for

the secured credit card product associated with the customer account. In addition, the

computer program code for identifying may comprise program code for determining a

list of potential customers for the secured credit card based on a plurality of customer

credit data provided from at least one financial clearinghouse, wherein the program

code for identifying further comprises program code for arranging the list of potential

customers into a plurality of groups and program code for determining a secured

credit card product to offer potential customers in each of the groups.

According to yet another aspect of the invention, a system is provided for

offering and providing a secured credit card product. The system may comprise:

means for identifying potential customers for a secured credit card product; and means

for determining an offer for the secured credit card product to be sent to each potential

customer, wherein the offer includes a stated security deposit and a stated, maximum

credit limit that a potential customer may receive for the secured credit card product.

The disclosed system may also include means for receiving each customer response to

the offer for the secured credit card product and means for establishing, in response to

each received customer response, a customer account for the secured credit card

product.

In the disclosed system, the means for establishing may comprise means for

determining, based on customer credit data, a credit limit for the secured credit card

product associated with the customer account. The disclosed system may also include

means for generating a notification to a customer of the customer account and the credit limit for the secured credit card product associated with the customer account.

Further, the means for identifying may comprise means for receiving a plurality of

customer credit data from at least one financial clearinghouse and means for

determining a list of potential customers for the secured credit card based on the

plurality of customer credit data. Moreover, the disclosed system may be provided

with means for arranging the list of potential customers into a plurality of groups and

means for determining a secured credit card product to offer potential customers in

each of the groups.

In accordance with still another aspect of the invention, a method is provided

for offering and providing a secured credit card product. The disclosed method

preferably comprises: sending an offer for a secured credit card product to a list of

potential customers, wherein the offer including a stated security deposit and a stated,

maximum credit limit that a potential customer may receive for the secured credit card

product; receiving each customer response to the offer for the secured credit card

product; and establishing, in response to each received customer response, a customer

account for the secured credit card product.

In the disclosed method, the step of establishing may comprise providing

for the secured credit card product associated with the customer account. In addition,

the method may further comprise notifying a customer of the customer account and

the credit limit for the secured credit card product associated with the customer

account. Further, the method may be implemented to include identifying the list of

potential customers for the secured credit card product, wherein the identifying comprises receiving a plurality of customer credit data from at least one financial

clearinghouse and determining the list of potential customers for the secured credit

card based on the plurality of customer credit data.

It is to be understood that both the foregoing general description and the

following detailed description are exemplary and explanatory only and are not

restrictive of the invention, as claimed. Further features and/or variations may be

provided in addition to those set forth herein. For example, the present invention may

be directed to various combinations and subcombinations of the disclosed features

and/or combinations and subcombinations of several further features disclosed below

in the detailed description.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which are incorporated in and constitute a part

of this specification, illustrate various embodiments and aspects of the present

invention and, together with the description, explain the principles of the invention.

In the drawings: FIG. 1 illustrates an exemplary system

environment in which the features of the present invention may be implemented;

FIG. 2 is an exemplary flowchart of a process for selecting potential customers

to send credit card product offers, consistent with the principles of the present

invention;

FIG. 3 is an exemplary flowchart of a process for screening the received credit

card product offers, in accordance with the principles of the invention; FIG. 4 is exemplary flowchart of another process for selecting prospective

customers to send credit card product offers, in accordance with the features of the

present invention; and

FIG. 5 is an exemplary flowchart of another process for screening the received

credit card product offers, consistent with the principles of the present invention.

DETAILED DESCRIPTION

Systems and methods consistent with the present invention protect credit card

issuers while addressing the needs of its card holders by offering a credit card product

with a stated maximum credit limit and a defined security deposit. The security

deposit is required because of the inherent risk involved in providing credit to

customers with poor or bad credit history. However, like traditional, unsecured credit

cards, the present invention offers a credit card product that is attractive to customers

in that it provides a variable credit limit that may reach a stated maximum upon

qualification. The credit limit is determined by the issuer and is generally based on a

number of non-exclusive factors, the most important of which are often the earning

capacity and credit history of each potential customer. By tailoring the credit limit to

potential customers based on their individual credit-worthiness, risk is minimized to

the credit card issuer. Further, by offering the product with a stated maximum credit

limit, a higher response level is provided as compared with conventional, secured

credit card products. As a result, with the features of the present invention, a credit

card issuer is capable of attracting a greater number of customers for a secured credit

card product, including individuals who are not responsive to ratio or fixed line credit card products and who do not qualify for more traditional, unsecured credit card

products.

The above-noted features and other aspects and principles of the present

invention may be implemented in various system or network environments to provide

automated computational tools to facilitate data collection and risk analysis. Such

environments and applications may be specially constructed for performing the

various processes and operations of the invention or they may include a general

purpose computer or computing platform selectively activated or reconfigured by

program code to provide the necessary functionality. The processes disclosed herein

are not inherently related to any particular computer or other apparatus, and may be

implemented by a suitable combination of hardware, software, and/or firmware. For

example, various general purpose machines may be used with programs written in

accordance with teachings of the invention, or it may be more convenient to construct

a specialized apparatus or system to perform the required methods and techniques.

The present invention also relates to computer readable media that include program

instruction or program code for performing various computer-implemented operations

based on the methods and processes of the invention. The media and program

instructions may be those specially designed and constructed for the purposes of the

invention, or they may be of the kind well-known and available to those having skill

in the computer software arts. Examples of program instructions include both

machine code, such as produced by compiler, and files containing a high level code

that can be executed by the computer using an interpreter. By way of a non-limiting example, FIG. 1 illustrates a system environment 50

in which the features and principles of the present invention may be implemented. As

illustrated in the block diagram of FIG. 1, system environment 50 includes an input

module 100, an output module 200, a computing platform 300, a database 600, and

one or more financial clearinghouses 510-550 that may be accessed through a

communications network 400. Computing platform 300 is adapted to provide the

necessary functionality and computing capabilities to analyze each customer's credit

history or data provided through input module 100, or provided from one or more of

the financial clearinghouses 510-550 through communications network 400. Credit

history information may be accessed and analyzed based on commercially available

sources (such as the FICO model from Fair, Isaac and Company, Inc.) and/or through

financial clearinghouses 510-550 which may include the one or more of the major

credit bureaus such as TRW/Experian, Equifax and TransUnion. The results of

analyzing the data are provided as output from computing platform 300 to output

module 200 for printed display, viewing or further communication to other system

devices. Such output may include a mailing list of potential customers for each

secured credit card product, a customer's credit or risk rating, and/or a customer's

response or potential profitability level. Output from computing platform 300 can

also be provided to database 600, which may be utilized as a persistent storage device

for storing, for example, customer mailing lists and new credit card account

information.

In the embodiment of FIG. 1, computing platform 300 preferably comprises a

PC or mainframe computer for performing various functions and operations of the invention. Computing platform 300 may be implemented, for example, by a general

purpose computer selectively activated or reconfigured by a computer program stored

in the computer, or may be a specially constructed computing platform for carrying-

out the features and operations of the present invention. Computing platform 300

may also be implemented or provided with a wide variety of components or

subsystems including, for example, one or more of the following: one or more central

processing units, a co-processor, memory, registers, and other data processing devices

and subsystems. As indicated above, computing platform 300 communicates or

transfers customer and credit data to and from one or more financial clearinghouses

510-550 through communications network 400. Communications network 400 may

comprise, alone or in any suitable combination, a telephony-based network (such as a

PBX or POTS), a local area network (LAN), a wide area network (WAN), a

dedicated intranet, and/or the Internet. Further, any suitable combination of wired

and/or wireless components and systems may be incorporated into communications

network 400. Computing platform 300 also communicates or transfers customer and

credit data to and from input module 100 and output module 200 through the use of

direct connections or communication links, as illustrated in FIG. 1. Alternatively,

communication between computing platform 300 and modules 100, 200 can be

achieved through the use of a network architecture (not shown) similar to that

described above for communications network 400. By using dedicated

communication links or a shared network architecture, computing platform 300 may

be located in the same location or at a geographically distant location from input

module 100 and/or output module 200. Input module 100 of system environment 50 may be implemented with a wide

variety of devices to receive and/or provide the data as input to computing platform

300. As illustrated in FIG. 1, input module 100 includes an input device 110, a

storage device 120, and/or a network interface 130. Input device 110 may comprise a

keyboard, a mouse, a disk drive or any other suitable input device for providing

customer or credit data to computing platform 300. Memory device 120 may be

implemented with various forms of memory or storage devices, such as read-only

memory (ROM) devices and random access memory (RAM) devices. Storage device

120 may include a memory tape or disk drive for reading and providing customer or

credit data on a storage tape or disk as input to computing platform 200. Input

module 100 may also include network interface 130, as illustrated in FIG. 1, to

receive data over a network (such as a LAN, WAN, intranet or the Internet) and to

provide the same as input to computing platform 300. For example, network interface

130 may be connected to a public or private database over a network for the purpose

of receiving and transferring customer or credit data to computing platform 300.

As illustrated in FIG. 1, output module 200 includes a display 210, a printer

device 220, and/or a network interface 230 for receiving the results provided as output

from computing module 200. As indicated above, the output from computing

platform 300 may include mailing lists of potential customers for credit card products,

credit or risk ratings for potential customers, and/or response or potential profitability

levels for potential customers. The output from computing platform 300 may be

displayed or viewed through display 210 (such as a CRT or LCD) and printer device

220. If needed, network interface 230 may also be provided to facilitate the communication of the results from computer platform 300 over a network (such as a

LAN, WAN, intranet or the internet) to remote or distant locations for further analysis

or viewing. In either case, the output from output module 200 can be used by the

credit card issuer to generate, for example, the necessary mail offers (which can be

either physical or electronic mail offers) for potential customers on the list(s)

determined for each secured credit card product. The output from output module 200

can also be used for other purposes, such as internal reports or monitoring.

In accordance with the principles of the present invention, an exemplary

process for selecting prospective customers and determining the product and credit

limit to offer each customer will now be described with reference to FIGS. 2 and 3.

FIG. 2 is an exemplary flowchart of a process for selecting prospective

customers to send product offers in a manner consistent with the principles of the

invention. As illustrated in FIG. 2, the credit card issuer first generates a list of

potential customers (step S.10). For example, using computing platform 300 or a

similar device the issuer identifies potential customers that match a certain risk

profile based on information provided from input module 100 and/or one or more

financial clearinghouses 510-550. As part of this step, the issuer may identify

potential customers based on their past credit history, number of accounts, prior

declarations of bankruptcy, payment delinquencies, etc. These factors can be

analyzed using a commercially available credit scoring model (such as the FICO

model) that is implemented alone or in any suitable combination with other risk

analysis models. Alternatively, one or more customized processes or risk models may

be employed by computing platform 300 to analyze each customer's credit history and data to generate the list of potential customers. For secured credit card offers,

customers determined to have an excellent or good credit rating may be eliminated

from consideration, while potential customers with poor credit (within a reasonable

risk range) placed on the list for the secured credit card product.

Based on the credit information of each potential customer, the issuer then

determines the type of product to offer each customer (step S.20). The type of secured

credit card product to offer a customer can be selected so that the required security

deposit and stated maximum credit limit is commensurate with each customer's credit

history and risk level. If more than one type of secured credit card product is to be

offered by the issuer, then potential customers on the list may be matched with the

product that provides the best match in terms of risk level and/or profit level for the

credit card issuer. For example, if two types of secure products are to be offered that

have the same required security deposit (e.g., $49) and differ only in the maximum

stated credit limit, then those customers identified on the list who have a relatively

higher credit rating may be offered the product with the higher maximum stated credit

limit (e.g., $,1000), while those customer who have a relative lower credit rating are

offered the product with the lower maximum stated credit limit (e.g., $500).

After determining the type of product to offer each potential customer, the

issuer sends the offers to the list of potential customers (step S.30). The offers that are

sent to potential customers may be sent in the form of solicitation or offer letters

through the mail and/or they may be electronically transmitted (e.g., by e-mail) to the

potential customers on the list. The sending of offers may be carried out by the credit

card issuer or may be performed by a third party contracted by the credit card issuer. FIG. 3 is an exemplary flowchart of a process for screening responses to credit

card product offers in a manner consistent with the principles of the present invention.

As shown in FIG. 3, the credit card issuer first receives the response to the credit card

offer from a customer (step S.40). Information provided by a customer in a response

may be provided as input to computing platform 300 by input module 100 or through

communications network 400. As further described below, this information may be

analyzed by computing platform 300 when processing the new account and

determining the appropriate credit limit for the customer. If payment for the required

security deposit is included by a customer with the response to the product offer, the

payment may be deposited in an account and recorded by the issuer. The response

from the customer may be in the form of a completed application or letter that is

received by the issuer through the mail. Alternatively, responses from customers may

be received electronically through a communications network (such as

communications network 400) or a network interface (such as network interface 130

of input module 100) and may be in the form of an electronic application or message.

After receiving the response from a customer, an analysis is performed to

determine the actual credit limit for the product offered to the customer (step S.50).

This analysis can be performed with computing platform 300 by re-evaluating the

customer's risk with a suitable risk model or more comprehensive process. As part of

this step, the customer's credit history can be re-evaluated alone or in combination

with the information received in the customer's response to the issue. The information

in the customer's response may indicate, for example, a customer's income, assets

and/or debt obligations, information on a customer's response, such as a customer's full legal name, current address and/or social security number, may also be utilized

by the issuer in order to gather more accurate and up-to-date data on the customer's

credit history from one or more of the financial clearinghouses 510-550. Computing

platform 300 may also make a comparison between the current and previous risk

evaluation to derive an overall risk assessment and the credit limit for the offered

product. By performing this analysis, computing platform 300 can determine whether

the customer qualifies for the maximum, stated credit limit or whether a lower credit

limit is more appropriate based on the customer's credit worthiness.

As further illustrated in FIG. 3, after determining the credit limit for a

customer, a customer account is set-up and established (step S.60). The customer

account may be set-up by computing platform 300 based on the credit limit

determined for the customer. As part of this process, information relating to the

account (e.g., customer name, address, account number, credit limit, etc.) may be

stored in database 600 by computing platform 300. A credit card in the form of a

plastic-card like member may also be generated by the credit card issuer. Following

step S.60, the customer is notified of their new account information, including the

determined credit limit of the secure credit card product associated with the account

(step S.70). Notification to each customer may be sent through the mail and/or

include an electronic notification message (such as an e-mail). Notification may also

include providing one or more plastic credit card members associated with the

customer's account for conducting transactions and purchases. In accordance with the principles of the present invention, another exemplary

limit to offer customers will now be described with reference to FIGS. 4 and 5.

FIG. 4 is an exemplary flowchart of another process for selecting prospective

invention. As illustrated in FIG. 4, the first step in the selection process is for the

credit card issuer to receive data from one or more financial clearinghouses 510-550

(step S.80). As indicated above, financial clearinghouses 510-550 may include one or

more of the major credit bureaus such as TRW/Experian, Equifax and TransUnion,

and communicate data with computing platform 300 through communications

network 400. Using this data, a list of potential customers is generated for the

secured credit card products (step S.90). The list of potential customers can be

generated by identifying individuals that fall within a predetermined range of

acceptable risk or credit worthiness. For secured credit cards, this "broad" cut to

identify potential customers can be performed by computing platform 300 using a

commercially available risk model (such as the FICO model) or a customized process

that analyzes credit history data and other credit-related factors. The goal of this

broad cut is to eliminate unwanted candidates (such as those with excellent or good

credit history), while identifying all potential customers that are more likely to be

responsive to a secured credit card offer (such as those with a poor or bad credit

history).

As illustrated in FIG. 4, the next step in the prospect selection process is to

perform a primary risk analysis on the list of potential customers (step S.100). This risk analysis may be performed by computing platform 300 on each potential

customer based on a risk model that is particularly suited for individuals with poor or

bad credit. Customer and credit-related data may be processed by such a risk model

to generate a risk score for each potential customer based on various factors, such as

bankruptcy claims, late payment history, payment delinquencies, etc. After

determining a risk score for each potential customer, the customers are then divided

into groups by computing platform 300 in accordance with their risk scores (step

S.l 10). In this regard, customers may be arranged in groups of risk scores that range

from low risk scores to high risk scores. By way of a non-limiting example,

computing platform 300 may arrange potential customers into eight different groups

of risk scores.

Following the grouping of customers, each group of customers is analyzed

using a response model to generate a response score (step S.l 15). The response score

provides an indication of the likelihood of a response from the group to a secured

credit card product. The response model may be based on various credit-related

factors, including income, number of accounts, debt, etc. Correlations or trends based

on historical data can also be incorporated into the response model in order to provide

a response score that more accurately indicates the propensity of each group to

respond to a secured credit card offer.

As further illustrated in FIG. 4, the response scores for each group are then

analyzed with the risk scores to determine which secured credit card product (if any)

to offer each of the designated groups (step S.120). The goal of this analysis is to

determine which secured credit card product should be offered to each group so that the greatest profit may be achieved by the credit card issuer. The exact product to

offer each group of customers may depend on the cost of sending the offers (as

measured by the response level) and the worth of the customer (as indicated by the

risk level). Generally, the lower risk score is for a group the greater the worth of the

group of customers will be to the issuer, and vice versa. The risk and worth of each

customer group may be analyzed for each secure credit card product offered by the

issuer. In addition, based on the response score for a group, an estimate can be made

as to the cost of acquiring new accounts for each group. By analyzing the potential

profit for each secured card product through a combination of the risk score and the

response score, a determination is made regarding the best product to offer each group

of potential customers. Of course, if the issuer only offers one type of secured card

product, step S.120 may determine to offer this product to each group of customers or

only to offer the product to groups that are determined to likely provide a profit to the

issuer. In addition, if any group is determined to be unprofitable for any secured

credit card product offered by the issuer, then the group may be excluded from

consideration and not offered a secured credit card product.

After identifying the appropriate product (if any) to offer each group, the

issuer sends corresponding offers to the potential customers of each group (step

S.130). The offers that are sent to potential customers may be sent in the form of a

solicitation or offer letter through the mail and/or they may be electronically

transmitted (e.g., by e-mail) to the potential customers of each group. The sending of

offers may be carried out by the credit card issuer or may be performed by a third

party contracted by the issuer. If the issuer determines that a particular group does not meet the profitability or risk criteria for the considered credit card products, those

potential customers may not receive any secured credit card offer or may receive an

offer for a different type of credit card product from the issuer (if available).

FIG. 5 is an exemplary flowchart of another process for screening received

credit card product offers in a manner consistent with the principles of the invention.

As indicated in FIG. 5, after receiving a response to an offer from a customer (step

S.140), a secondary risk analysis is performed on each customer (step S.150). This

secondary risk analysis may be performed by computing platform 300 to re-evaluate

the customer's risk. As part of this step, the customer's credit history can be re-

evaluated alone or in combination with the information received in the response. The

information in the customer's response may indicate, for example, a customer's

income, assets and/or debt obligations. Information on a customer's response or

application, such as a customer's full legal name, date of birth, current address and/or

social security number, may also be utilized by the issuer to gather more accurate and

up-to-date data on the customer's credit history from one or more of the financial

clearinghouses 510-550. Other application information, such as a customer's response

to various questions (such as renting status, car ownership status, income, etc.) can

also be used to analyze risk. Computing platform 300 may also make a comparison

between the current and previous risk evaluation to derive an overall risk assessment

or score for each customer. By performing this analysis, computing platform 300 can

determined whether the customer qualifies for the maximum, stated credit limit or

whether a lower credit limit is more appropriate based on the customer's credit

worthiness. Thus, after performing the secondary risk analysis, the credit limit for the product offered to the customer is determined (step S.l 60). Thereafter, the credit card

issuer establishes a new customer account with the determined credit limit (step

S.l 70) and notifies the customer of the new account information (step S.l 80).

As indicated above with reference to FIG. 3, the customer account may be set-

up by computing platform 300 based on the credit limit determined for the customer.

As part of step S.l 60, information relating to the new customer account (e.g.,

customer name, address, account number, credit limit, etc.) may be stored in database

600 by computing platform 300. When notifying the customer of the account at step

S.l 80, the new account information (including the determined credit limit) may be

indicated to the customer. A credit card in the form of a plastic-card like member may

also be generated by the credit card issuer and provided as part of the notification to

the customer.

The exemplary flowchart of FIG. 5 described above assumes that the

customer's response to the offer fulfills all of the issuer's requirements. However, if

the customer does not pay the required security deposit in full, the issuer may request

the deposit from the customer before granting the new account. Similarly, if the

customer sends a check or another payment instrument for the security deposit that

does not clear, the credit card issuer may either restrict the account if the credit card

product has been sent or if it has not been sent the issuer may delay opening of the

account until payment of the deposit is satisfied.

It will be apparent to those skilled in the art that various modifications and

variations can be made to the invention without departing from the scope or spirit of

the invention. For example, in order to increase the likelihood that a customer will qualify for at least a minimum credit limit when the response is received, secured

credit card offers of the present invention may be held open or remain valid only for a

predetermined period of time. If a response to an offer is received past the expiration

date, the credit card issuer may deny the new account request, or re-evaluate and

approve the account only if the customer still has the necessary qualifications for the

minimum credit limit. If, however, the customer responds to an offer before the

expiration date and has a very poor credit rating after the application is returned, the

issuer may be obligated to provide the secured credit card product that was offered. In

such a case, the issuer may minimize risk by providing the customer with only the

minimum credit limit allowed for the product being offered.

Other modifications and embodiments of the invention will be apparent to

those skilled in the art from consideration of the specification and practice of the

invention disclosed herein. For example, the features and aspects of FIGS. 2, 3, 4 and

5 may be implemented alone or in any suitable combination by a credit card issuer to

offer and provide secured credit card products. Therefore, it is intended that the

specification and examples be considered as exemplary only, with a true scope and

spirit of the invention being indicated by the following claims.

Claims

WHAT IS CLAIMED IS:

1. A method for offering and providing a secured credit card product, said

method comprising:

identifying potential customers for a plurality of secured credit card product

types;

selecting, from said plurality of secured credit card product types, the type of

secured credit card product to offer each potential customer;

sending an offer for the selected secured credit card product to each potential

customer, said offer including a stated security deposit and a stated, maximum credit

limit that a potential customer may receive for the secured credit card product upon

qualification;

receiving each customer response to the offer for the secured credit card

product; and

establishing, in response to each received customer response, a customer

account for the secured credit card product.

2. A method according to claim 1, wherein said establishing comprises

providing customer credit data and determining, based on the customer credit data, a

3. A method according to claim 2, wherein said method further comprises

notifying a customer of the customer account and the credit limit for the secured credit

card product associated with the customer account.

4. A method according to claim 1, wherein said identifying comprises

receiving a plurality of customer credit data from at least one financial clearinghouse and determining a list of potential customers for the secured credit card based on the

plurality of customer credit data.

5. A method according to claim 4, wherein said identifying further

comprises arranging the list of potential customers into a plurality of groups.

6. A computer program product for offering and providing secured credit

card products, the computer program product comprising computer-readable media

having computer-readable code, the computer program product comprising the

following computer-readable program code for effecting actions in a computing

platform:

program code for identifying potential customers for a plurality of secured

credit card product types;

program code for selecting, from said plurality of secured credit card product

types, the type of secured credit card product to offer each potential customer;

program code for determining an offer for the selected secured credit card

product to be sent to each potential customer, said offer including a stated security

deposit and a stated, maximum credit limit that a potential customer may receive for

the secured credit card product upon qualification; and

program code for establishing, in response to each customer response to the

offer, a customer account for the secured credit card product.

7. A computer program product according to claim 6, wherein said

program code for establishing comprises program code for determining, based on

customer credit data, a credit limit for the secured credit card product associated with

the customer account.

8. A computer program product according to claim 7, further comprising

program code for generating a notification to a customer of the customer account and

account.

9. A computer program product according to claim 6, wherein said

program code for identifying comprises program code for determining a list of

potential customers for the secured credit card based on a plurality of customer credit

data provided from at least one financial clearinghouse.

10. A computer program product according to claim 9, wherein said

program code for identifying further comprises program code for arranging the list of

potential customers into a plurality of groups.

11. A system for offering and providing a secured credit card product, said

system comprising:

means for identifying potential customers for a plurality of secured credit card

product types;

means for selecting, from said plurality of secured credit card product types,

the type of secured credit card product to offer each potential customer; and

means for determining an offer for the selected secured credit card product to

be sent to each potential customer, said offer including a stated security deposit and a

credit card product.

12. A system according to claim 11, further comprising means for

receiving each customer response to the offer for the secured credit card product and means for establishing, in response to each received customer response, a customer

account for the secured credit card product.

13. A system according to claim 12, wherein said means for establishing

comprises means for determining, based on customer credit data, a credit limit for the

secured credit card product associated with the customer account.

14. A system according to claim 13, further comprising means for

the secured credit card product associated with the customer account.

15. A system according to claim 11, wherein said means for identifying

comprises means for receiving a plurality of customer credit data from at least one

financial clearinghouse and means for determining a list of potential customers for the

secured credit card based on the plurality of customer credit data.

16. A system according to claim 15, further comprising means for

arranging the list of potential customers into a plurality of groups.

17. A method for offering and providing a plurality of secured credit card

product types, said method comprising:

selecting, from said plurality of secured credit card product types, the types of

secured credit card product to offer each customer;

sending an offer for the selected secured credit card product to a list of

potential customers, said offer including a stated security deposit and a stated,

product; and

establishing, in response to each received customer response, a customer

account for the secured credit card product.

18. A method according to claim 17, wherein said establishing comprises

providing customer credit data and determimng, based on the customer credit data, a

19. A method according to claim 18, wherein said method further

comprises notifying a customer of the customer account and the credit limit for the

secured credit card product associated with the customer account.

20. A method according to claim 17, further comprising identifying the list

of potential customers for the secured credit card product, wherein said identifying

comprises receiving a plurality of customer credit data from at least one financial

card based on the plurality of customer credit data.

21. A method according to claim 20, wherein said identifying further

comprises arranging the list of potential customers into a plurality of groups.

22. A method according to claim 17, wherein said establishing comprises

providing customer credit data and determining, based on the customer credit data,

whether a customer qualifies for the stated, maximum credit limit for the secured

credit card product.

23. A method according to claim 5, wherein said selecting comprises

performing a response analysis for each group and determining the type of secured

credit card product to offer each group.

24. A method according to claim 23, wherein said performing a response

analysis comprises using a response model to generate a response score.

25. A method according to claim 24, wherein said selecting comprises

using the response score to determine the type of secured credit card product to offer.

26. A computer program product according to claim 10, wherein said

program code for selecting comprises program code for performing a response

analysis for each group and determimng the type of secured credit card product to

offer each group.

27. A computer program product according to claim 26, wherein said

program code for performing a response analysis comprises program code for using a

response model to generate a response score.

28. A computer program product according to claim 27, wherein said

program code for selecting comprises program code for using the response score to

determine the type of secured credit card product to offer.

29. A system according to claim 16, wherein said means for selecting

comprises means for performing a response analysis for each group and determining

the type of secured credit card product to offer each group.

30. A system according to claim 29, wherein said performing means

comprises means for using a response model to generate to response score.

31. A system according to claim 30, wherein said selecting means

comprises means for using the response score to determine the type of secured credit

card product to offer.

32. A method according to claim 21, wherein said selecting comprises

credit card product to offer each group.

33. A method according to claim 32, wherein said performing a response

analysis comprises using a response model to generate a response score.

34. A method according to claim 33, wherein said selecting comprises