2 May 2015

DEFINITION of ‘Straight-Roller’
A credit card account which is increasingly delinquent, and in which no effort in making payments is made. Straight-roller accounts quickly move – “roll straight” – past a short-term delinquency phase into long-term delinquency, and are more likely to go into default.

Financial institutions that issue credit cards use sophisticated modelling to determine how well the cards they issue will perform. Models take into account usage patterns, the amount of credit that is used, and when card payments are made. These models forecast what the financial institution should expect to see in the future, often looking at several months ahead.

Straight-roller accounts present a problem to forecasting methodologies because the accounts can be current when a forecast is made, only to quickly become delinquent 30, 60, and 90 days out. This is specifically an issue when a financial institution makes a forecast for three months out. Based on the past behaviour of the account holder, it would be expected that the card would continue to have its balance paid in a timely manner, and a sudden stoppage of payments is an unexpected development that the three month forecast did not take into account.

Financial institutions keep an eye out for straight-roller accounts because they carry a higher likelihood of going into default, which may result in the financial institution having to write-off the debt accrued in the account. Typically, accounts that are delinquent over a short period of time can be addressed by reaching out to the cardholder, and most cardholders make an effort to make minimum payments in order to protect their credit ratings.

Creating a more accurate forecast requires financial institutions to further examine past accounts that were current for a period of time before becoming straight-rollers, and comparing them to accounts that were current and continued to remain current. This analysis can help pin point other factors that may correlate strongly with an account that may become a straight-roller.

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