The Demand Solutions Blog

To approve or not approve (or conditionally approve), that is the question

Posted by Donald Davidoff on Dec 2, 2012 9:08:00 PM

Pricing is obviously the biggest lever for maximizing operating revenue—price too high and occupancy suffers; price too low and you’re leaving money on the table.

But there are other levers that affect revenue as well—let’s talk about one of those elements of demand management that is so often misunderstood: credit scoring and acceptance.

How are credit score cutoff decisions made in your organization? Are they made by operations or by the pricing and revenue management organization (if you have one)? Do you manage to a decline rate (i.e. keeping decline rates above or below a certain amount) or are they based on an analysis of the expected default rate or bad debt? Does your credit scoring vendor even know what the expected default or bad debt is expected to be by score? Many systems are rule-based rather than outcome-based, so they don’t really know what to expect.

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Topics: Pricing, property management, multi-family housing, credit scoring