TransUnion recently examined another risk segment credit providers should consider. It’s when consumers accept third-party debt settlements.

Analysts generated a report that explored consumer behavior before and after enrollment, comparing debt settlement outcomes with bankruptcy, and credit attributes that may help identify likely enrollment earlier.

The five major segments of the report covered:

—Trends driving growth in third-party debt settlement enrollment among participating lenders

—How credit behavior differs among debt settlement, bankruptcy and control populations

—Credit usage patterns that may emerge before consumers enroll in debt settlement programs

—Research findings on the relationship between debt settlement enrollment and future credit performance

—Predictive indicators associated with future debt settlement enrollment and changing credit behaviors

“Third-party debt settlement enrollment is increasing, and a growing share of enrolled consumers are entering these programs while still current on their financial obligations. This shift creates new considerations for portfolio management, credit extension and risk assessment strategies,” TransUnion said.

“As debt settlement participation evolves, lenders may not have a complete view of emerging changes in consumer financial behavior through traditional performance measures alone. Understanding how consumers behave before and after enrollment can help organizations evaluate portfolio strategies, account management approaches and lending decisions more effectively,” TransUnion continued.

TransUnion also highlighted the primary takeaways from the report, which included:

—A clearer understanding of today’s third-party debt settlement landscape

—Greater insight into the credit behaviors associated with debt settlement enrollment

—Context for evaluating how debt settlement activity may influence portfolio and account management strategies

—Questions and considerations to support internal planning discussions

—A framework for assessing consumer behaviors and indicators associated with debt settlement enrollment

“These insights can help risk and lending teams better understand emerging exposure and make more informed decisions before performance or recovery is impacted,” TransUnion said about the report that is available online.