For anyone who has ever watched a movie or television show featuring someone trying to solve a crime, invariably there is a scene or even multiple scenes where the detective tries to “get inside the head” of the criminal, in order to understand his or her motivation, and to uncover what actually happened at the scene of the crime. Comparing consumers to victims of crimes and debt collectors to detectives might be a bit crude, but nobody will doubt the importance of asking questions during a collection call in order to understand someone’s financial situation. How else can you really help someone unless you know what kind of help they need?
The Federal Reserve Bank of New York has published data that can help collectors better understand the people from whom they are trying to collect, by analyzing demographic data to understand what types of people are more likely to take on debt or which types of people are more likely to struggle to pay off their debts.
The data looks at individuals according to race, gender, and education along with comparing different types of debt, including credit cards, auto loans, student loans, and mortgages.
For example, women and minorities are less likely to own a home or a car that was financed and generally have lower amounts of credit card debt than men or non-minorities, according to the data. The findings open a door into racial and gender-based differences in consumer borrowing behavior, “and post bigger questions about the implications and sources of these disparities,” according to researchers.
Minorities are also more likely to be delinquent on different types of debt, like credit cards, even though they had lower amounts of debt. One possible conclusion drawn by the researchers was the differences in “labor market outcomes” or the types of jobs that the different groups have played a role in the “seemingly opposite patterns.”
Knowing this type of information can help collectors ask the right questions during calls to create solutions that work best for everyone. Getting to the bottom of a situation is a shared objective of both collectors and detectives.