Skip Tracing: What It Is, How It Works, and Why It Matters for Lenders
When borrowers go dark due to missed payments, returned mail, or unanswered calls, collections stall. Incomplete data doesn’t just delay recovery; it creates risk. Skip tracing helps locate hard-to-reach borrowers, but it’s only effective when paired with the right tools and processes.
In this article, we’ll break down what skip tracing is, how it works in loan servicing, and the best practices loan servicers can use to turn new borrower data into action.
What Is Skip Tracing?
Skip tracing is the process of locating borrowers whose contact information is outdated or deliberately hidden. Think of “skip” as in someone who’s “skipped town,” leaving behind unpaid loans and no way to get in touch.
While skip tracing is used in debt collection, legal work, and real estate, loan servicing is one of its most critical applications. Servicers often need to find borrowers who’ve moved or changed phone numbers without notice.
With U.S. consumer debt reaching a record $17.7 trillion and delinquency rates hitting 3.6% in late 2024 (the highest in nearly five years) loan servicers need reliable ways to reconnect with borrowers and recover what’s owed.
How Does Skip Tracing Work?
Skip tracing follows a step-by-step process to help loan servicers locate borrowers who’ve gone off the grid. While the approach may vary by case, the methods remain consistent and are most effective when integrated into your collections workflow.
It’s not a standalone fix. Without a system that can act on the information you uncover, skip tracing is just data. But with the right tools in place, servicers can turn borrower insights into successful outreach and faster resolution.
Skip Tracing Process:
- Data Gathering
Skip tracers start by pulling information from loan records, payment history, and prior addresses. This internal data provides the foundation for any successful skip trace.
- Public Records Search
Property deeds, court filings, and utility records offer valuable clues about a borrower’s current location and financial situation.
- Online & Social Media Investigation
Facebook, LinkedIn, and other digital footprints can reveal recent activity and potential contact information.
- Field Work (When Necessary)
This is rare but may include neighborhood checks or interviews with previous contacts when digital methods fall short.
Is Skip Tracing Legal?
Yes, skip tracing is legal, but only when done within the boundaries of privacy laws and fair debt collection practices.
To remain compliant, loan servicers must ensure that skip tracing efforts:
- Do not involve impersonating law enforcement or government officials
- Avoid unauthorized access to private or sensitive information
- Refrain from intimidation, harassment, or deceptive tactics
- Follow all applicable privacy laws and fair debt collection guidelines
- Are well-documented using transparent, auditable systems
Nortridge helps loan servicers stay on solid legal ground with configurable workflows, detailed activity logs, and built-in audit trails. Every action taken—from skip trace assignment to borrower contact—can be tracked, reviewed, and verified, supporting ethical, compliant collections from start to finish.
Skip Tracing Best Practices for Loan Servicers
Effective skip tracing can dramatically improve recovery rates, if done right. These skip tracing best practices help loan servicers locate borrowers more efficiently, stay compliant, and reduce time-to-resolution across collections workflows.
Start with Your Own Data
Before turning to third-party tools, tap into the data you already have. Review loan applications, employment details, previous addresses, and co-signer information.
Many servicers skip this step, but it often delivers the fastest results. Your loan servicing system should surface this data quickly, helping you make informed decisions early in the skip trace process.
Integrate Third-Party Tools
Third-party skip tracing services offer access to databases like credit reports, utility records, and public filings. These tools help build a more complete borrower profile.
The key is integration. When skip tracing tools work seamlessly with your servicing platform, your team can view borrower communication history, trace results, and payment data all in one place.
Track Everything with Audit Trails
Always document skip tracing activity: what databases were used, when searches were run, and what information was found.
Built-in audit trails help ensure compliance and prevent duplicate efforts. Manual tracking increases risk of gaps and missed steps.
Automate Follow-Up Steps
Once new contact info is found, don’t let it sit idle. Use automated workflows to trigger the next action, whether it’s a reminder, a call, or a notice.
Nortridge’s collections software lets you create configurable queues and outreach rules tied directly to skip tracing results—so no insight goes to waste.
Measure What Matters
Track key performance indicators like:
- Right-party contact rate
- Payment arrangement success
- Time from trace to resolution
- Cost per successful skip trace
Use reporting tools to spot trends and fine-tune your strategy. Nortridge’s built-in dashboards and reporting capabilities help servicers monitor effectiveness in real time.
Advanced Skip Tracing Tips for Better Results
Experienced loan servicers know that skip tracing success depends on more than just having the right tools. It takes strategy, proper timing, and thorough documentation. The following tips can help increase contact rates while keeping your team compliant:
- Call during business hours when borrowers are more likely to answer unfamiliar numbers.
- Use multiple outreach methods such as phone, email, and text messages in the same day. Space them out to avoid borrower fatigue or regulatory issues.
- Record every contact attempt including the time, communication method, and result. This helps prevent duplicate outreach and supports compliance reviews.
- Check public social media activity for clues about recent moves or employment. Avoid reaching out directly through personal accounts.
Effective skip tracing is about gathering accurate borrower information while following privacy and communication laws.
Nortridge provides the tools to support each step with consistency, transparency, and complete documentation. This allows your team to maintain compliance and improve skip tracing results.
How Nortridge Supports Efficient and Compliant Skip Tracing
Nortridge helps loan servicers turn skip tracing insights into action with:
- Configurable Workflows: Automate skip tracing steps and follow-up tasks based on your specific collection strategies
- Integrated Data Fields: Store and track updated borrower information securely within your loan records
- Audit Trails: Ensure every skip tracing action is recorded and reviewable for compliance purposes
- Custom Reports: Monitor skip tracing outcomes by portfolio, team, or timeline to measure effectiveness
- API-Friendly: Connect with third-party skip tracing tools or databases as needed without disrupting workflows. Our consumer lending platform includes a two-way API framework that allows flexible integrations with skip tracing services.
Nortridge helps you act on borrower insights quickly, securely, and at scale.
Why Skip Tracing Is More Effective with the Right Loan Servicing Platform
Skip tracing alone only provides information. Without a system that adapts to new borrower data and triggers appropriate actions, that information sits unused. A comprehensive loan management software platform should seamlessly integrate skip tracing insights with follow-up workflows.
Nortridge enables end-to-end loan lifecycle management, including collections strategies that use skip tracing as a starting point. Our platform automates the next steps once borrowers are located, from payment plan setup to compliance documentation. The difference between successful and unsuccessful collections often comes down to speed and follow-through.
Take Control of Your Collections Workflow
Skip tracing is just one part of managing risk and reducing delinquencies. The real value comes from having a loan servicing platform that can immediately act on the information skip tracing provides.
Nortridge empowers loan servicers to manage collections with precision, flexibility, and scale. Our configurable workflows ensure that located borrowers receive appropriate outreach while maintaining full audit trails for compliance.
See Nortridge in Action – Schedule a Demo