SYSTEM AND METHOD FOR FACILITATING SELECTION OF A CREDIT CARD
BACKGROUND OF THE INVENTION
1. FIELD OF THE INVENTION
This invention relates generally to the field of financial transaction cards, such as credit cards. More specifically, the invention relates to a system and method by which a consumer can narrow the choice of available credit cards to those that match certain lifestyle and credit history criteria.
2. BACKGROUND
There are a multitude of credit cards and similar financial transaction cards available to consumers. Such cards are offered by numerous financial institutions and are often co-sponsored by a variety of organizations, including corporations, universities, sports teams, etc. The interest rates and membership fees associated with the cards vary widely. Furthermore, many financial transaction cards offer rewards or other incentives to consumers. Consumers typically have incomplete information about the many financial transaction cards that are available and their features and benefits. Moreover, certain consumers may not meet the credit requirements for cards that they might otherwise select. Consequently, choosing a financial transaction card and qualifying for it can be a difficult experience for many consumers.
Recently, certain "metasites" have become available to consumers on the World Wide Web for obtaining information about various credit card offers. Examples of these are www.getsmart.com, www.creditland.com, www.credicardmenu.com and www.creditnet.com. These metasites allow consumers to compare the features and benefits of different credit card offers. However, most of these sites simply provide information about various credit card products. It is then up to the consumer to narrow the field to those that best suit the consumer's interests and needs. Furthermore, the consumer must actually
apply for a selected credit card before receiving an indication as to whether or not he or she will qualify to receive the card.
SUMMARY OF THE INVENTION
The present invention provides a system and method for assisting a consumer in selecting a financial transaction card. A database of information about various financial transaction card offers from a plurality of financial institutions is maintained. The information includes interest rates, membership fees, promotional incentives and the like. An input/output facility permits communication between the database host and a consumer, preferably via the Internet. The consumer provides certain information about his or her lifestyle and financial circumstances. Credit information for the consumer is also obtained. Based on the information provided by the consumer, filters are applied to the available financial transaction cards to select those that best match the consumer's lifestyle and credit profile. Based on the consumer's credit rating, probabilities that the consumer will qualify to receive the selected cards are estimated. The selected financial transaction cards are presented to the consumer so that the consumer may make a final selection and proceed with an application for one or more of the cards.
BRIEF DESCRIPTION OF THE DRAWINGS
Figure 1 is a block diagram illustrating the system of the present invention.
Figure 2 is a functional flow diagram illustrating the method steps of the present invention.
Figure 3 is a decision tree for classifying consumers according to credit history responses.
Figure 4 is a table of adjustments to qualifying probabilities based on product characteristics.
DETAILED DESCRIPTION OF THE INVENTION
In the following description, for purposes of explanation and not limitation, specific details are set forth in order to provide a thorough understanding of the present invention. However, it will be apparent to one skilled in the art that the present invention may be practiced in other embodiments that depart from these specific details. In other instances, detailed descriptions of well-known methods and devices are omitted so as to not obscure the description of the present invention with unnecessary detail.
Figure 1 illustrates a system 10 constructed in accordance with the present invention. A database 12 stores information concerning financial transaction cards offered by a plurality of card issuers 14. Card issuers 14 are typically financial institutions such as banks, but may also include co-sponsoring organizations. The information stored in database 12 includes, at a minimum, the annual percentage rate associated with each financial transaction card offer, the annual membership fee, if any, details of any promotional or incentive features of the card, such as airline miles, rebates, discounts, charitable contributions, etc., and information as to the targeted credit profile necessary for a consumer to be approved. The information also includes other features that may influence a consumer decision to apply for the card, such as exclusivity of acceptance by certain merchants, unique graphics on the card, etc.
Database 12 is hosted by a server 16, which provides a consumer 18 with access over a global communications network, such as the Internet. Server 16 provides consumer 18 with a graphical user interface by which the consumer can provide certain information about his or her lifestyle and credit history as more fully described below.
Figure 2 is a functional flow diagram of the inventive method for facilitating consumer selection of a financial transaction card. In the particular embodiment described, the method is implemented via a web site hosted on the
World Wide Web. However, the invention is not limited in this regard and other methods of communicating between a consumer and a central database host may be utilized. The consumer begins by accessing the web site using conventional Internet browser software operating on a personal computer or other Internet connection device. A welcoming screen provides the consumer with an overview of the process for choosing a financial transaction card. The consumer is next prompted to answer a set of questions or respond to a set of statements designed to gauge the particular consumer's interests, which may then be used to make a selection from among the available transaction card products. Some examples of statements that the consumer may be asked to respond to are the following;
• I always prefer to get cash back rather than free deals.
• I always use coupons when grocery shopping and would like find ways of reducing my grocery bills.
• I belong to my college alumni association and regularly want to help my school.
• I drive frequently and spend a fortune on gasoline.
• I feel a strong affinity to groups that work to protect environment and preserve our natural history.
• I frequently travel to the same vacation destination and have a strong affinity for that location.
• I like to personalize my checks and other items with special designs that make me feel better when I see them.
• I live a very active lifestyle that involves sports and other outdoor activities.
• I often contribute to or belong to organizations that work to better people's lives or help my community.
• I religiously follow a particular sports team or league.
• I strongly support a professional association to which I belong.
• I travel frequently and like to earn free airline miles.
• I use the Internet frequently for shopping and auctions, would be interested in ways to earn rewards or other benefits online.
• I work hard to keep in good physical shape and stay healthy.
• I'm a heavy user of telephone services and long distance and would be interested in lowering my phone bills.
• I'm always looking for ways to earn rewards and rebates from merchants that I shop with frequently.
• I'm very proud of my profession and like people to know what I do.
• Music, movies, theatre, and other entertainment are a passion.
• My car is important to me, and I spend a good deal of researching prices, etc.
• My home, my garden, and my pets are very important parts of my life.
• When I travel I try to stay in the same hotels to take of their special offers and rewards.
For each statement, the consumer is asked to click a box numbered 1 through 5 where 1 indicates that the consumer strongly disagrees with the statement and 5 indicates that the consumer strongly agrees with the statement. After responding to each of the statements, the consumer may save the responses as a profile for future reference. To create the profile, the consumer is prompted to enter identifying information, such as an email address and a password.
The consumer is given the option of bypassing the lifestyle questionnaire and directly entering certain lifestyle and interest criteria. For example, the consumer may be presented with a series of boxes, any or all of which may be checked, corresponding to card features, such as airline rewards, cash rewards, hotel rewards, merchandise rewards, careers and professions, colleges and universities, etc. Responses to these card preferences may be followed up with more specific inquiries. For example, if the consumer has indicated a preference for airline rewards, the consumer may then be prompted, with pull down menus or
equivalent means, to specify a particular type of reward (e.g., frequent flyer miles, ticket discounts, free companion tickets, etc.) and a particular airline. Likewise, if the consumer has indicated a preference for a card related to careers and professions, the consumer may then be prompted to select from general categories of careers and professions and, optionally, to select a specific career or profession from within the general category. These responses may also be used to create and save a consumer profile.
The data provided by the consumer, whether as responses to the lifestyle questionnaire or as specific card preferences, is then processed to select, from among the various transaction card offerings maintained in database 12, those that most closely match the lifestyle and interest profile of the consumer.
After obtaining the consumer information for matching available financial transaction cards to the interests and lifestyle of the consumer, the next part of the process focuses on identifying those cards for which the consumer will most likely be approved. If the consumer agrees, a credit rating may be obtained from a third party credit rating bureau. To proceed in this way, the consumer simply provides his or her name, address and social security number. Many consumers, however, are wary about providing such information over the Internet. Therefore, the consumer is offered the alternative of completing an anonymous credit profile so that the consumer's credit rating may be approximated. While this is not as accurate as obtaining a third party credit report, the consumer's credit rating may be approximated with sufficient accuracy for the purpose of screening the available financial transaction cards.
Various algorithms may be employed to approximate the consumer's credit rating. Such algorithms are available from third party vendors. In a particular embodiment of the invention, the consumer is asked the following questions:
1. Are you currently employed?
□ Y s
□ No
□ Retired
□ Student
2. What is your approximate annual household income?
□ Less than $14,400
□ $14,001 - 24,999
□ $25,000 - $47,999
□ $48,000 - $79,999
□ $80,000 or more
3. Have you ever declared bankruptcy?
□ No
I I Yes, in the last 7 years
I I Yes, more than 7 years ago
4. My total balance for all of my credit cards is:
□ Under $1,050
□ $1,050 to $6,800
□ $6,801 to $14,750
□ Over $14,750
5. My highest credit line on my credit cards is:
□ Under $2,200
□ $2,200 to $6,800
□ $6,801 to $10,250
□ Over $10,250
6 How many credit cards or loans have you paid more than 3 months late''
I I None
I I 1 or 2 credit cards or loans
I I 3 or more credit cards or loans
7 How long has it been since you paid three or more months late
I I 12 months or less
□ 12 to 20 months
I I Over 20 months
I I Never been three months late
The responses to the last four of these seven questions are used to assign the consumer to one of eleven classifications A decision tree for making the classification is shown in Figure 3 Each classification or "node" has associated therewith a set of probabilities, based on a sampling of actual credit card applications, that the particular consumer will qualify as a "sub-prime", "prime" or "super-prime" prospect m the eyes of a ciedit card issuer For example, a consumer who has fewer than three late payments (over 90 days), whose highest credit line is less than $6,800 and who has had a late payment (over 90 days) within the last twenty months is assigned to node 1 A consumer assigned to this node has an approximately 62% chance of being classified as sub-prime, an approximately 23% chance of being classified as prime and an approximately 15% chance of being classified as super-prime
The probabilities based on the consumer's responses to the four credit questions are adjusted according to qualification criteria for different types of transaction card products The products available to a consumer are categorized by prestige (e g , secured, classic, gold or platinum) and by type (e g , affinity, brand or co-brand) The three questions related to bankruptcy, income and employment are used to adjust the calculated probabilities based on the four credit
questions. The adjustment factors are shown in Figure 4. Affinity and co-brand offers attract lower risk prospects, all other things being equal. It is estimated that there will be a 10% and a 15% improvement, respectively, in approval rates for these two types of products. The product of all four factors is used to adjust the credit-based probabilities. For example, a consumer who has never declared bankruptcy, who has annual income between $48,000 and $80,000. who is employed and is applying for a branded platinum card will have adjustment factors of 1.0, 0.8, 1.0 and 1.0 for an overall adjustment factor of 0.8, which means that the basic approval probability based on credit factors will be reduced by 20%
Once the consumer's actual or approximate credit rating has been obtained, the credit requirements of the various available financial transaction cards that match the consumer's lifestyle and interest profile are evaluated. The consumer is then presented with a selection of financial transaction cards matching his or her profile, together with an approximate probability of approval. Such probability may be presented as an approximate quantitative value or as a qualitative ranking, such as excellent, good, fair or poor. Certain key parameters of the cards may be presented, such as the annual percentage rate, introductory rate, if different, and annual fee. Hyperlinks may be included with which the consumer can view the complete terms and conditions of the selected cards and/or apply on-line for one or more of the selected cards.
It will be recognized that the above-described invention may be embodied in other specific forms without departing from the spirit or essential characteristics of the disclosure. Thus, it is understood that the invention is not to be limited by the foregoing illustrative details, but rather is to be defined by the appended claims.