How Figure and Method closed the loop on debt consolidation and cut delinquency in half

Traditional debt consolidation is risky for lenders because they usually hand cash to a borrower and hope they pay off their old bills. Often, consumers spend the new money elsewhere instead. Figure and Method are changing this by automating the payoff process. This technology ensures the money goes directly to the creditors, closing the loop instantly. For retailers and financing operators, this is a major shift in how credit risk is managed. Credit bureau data is often 30 days old, making it hard to see a borrower's real-time financial health. By using real-time APIs to verify and pay off debt, lenders can cut delinquency rates in half. This makes it easier to approve borrowers who might have been rejected under old rules. If you offer high-ticket financing or debt-relief products, this technology reduces the 'double-dipping' problem. It ensures that credit limits aren't being maxed out twice. As this technology becomes standard, expect lenders to offer better terms to consumers because the risk of funds being misused is virtually eliminated. This creates a safer environment for extending larger lines of credit at the point of sale.

Source: Tearsheet

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