Executive Conversations is a HousingWire web series that profiles the powerful people in the financial industry, uncovering the operations and people who make this sector tick. In the latest installment, we sit down with Mike Darnay, Vice President of Marketing creditexpertTo discuss how lenders can use debt to increase affordability and profitability.
HousingWire: How Much Can Potential Homebuyers Improve Their Credit Scores Within the Origination Cycle?
Mike Darnay: Our predictive analytics engine shows that approximately 70% of all mortgage applicants, across all FICO scores, can improve their credit scores by at least one 20-point credit score band within 30 days if they specifically To them perform simple actions outlined in the drawn up plan.
In a purchase market – like the one we are in today – this improvement can be achieved within the normal mortgage origination cycle.
It is also important to note that what we do is not credit counseling. It can take years of work with a credit counselor to make an impact on your credit score. We’re not even covering credit repair, which can take months to get results and cost applicants hundreds to thousands of dollars in fees.
CreditXpert is a data science company. Our proprietary predictive analytics engine has been trained on approximately one billion credit inquiries. This means the improvement potential we show to applicants and the detailed plans that help them realize the potential is highly accurate and can be achieved in a short amount of time.
HW: What can a potential homebuyer do to improve his credit score?
MD: It really depends on their situation. Recommendations are a combination of actions that are specific to the applicant’s credit file. This may include paying off balances, closing accounts, opening accounts or removing authorized users.
We’ve analyzed nearly one billion credit inquiries, giving us a deep understanding of what actions matter to each individual borrower. This distinction is important because applicants have little idea of how their scores are derived, and they often don’t know what steps they should take to improve them.
Our plans provide specific action steps applicants can take to improve their credit and uncover their chances of reaching a target score. This probability is displayed correctly on the report. When applicants take the actions we recommend, they see results.
The one thing they can’t or shouldn’t do is guess and expect to see a good result. Random credit repair tasks rarely work as envisioned and can adversely affect credit scores. This is the exact opposite of what applicants and lenders want during the mortgage process. Our analysis and reports provide them with detailed results that work.
HW: How can a high credit score reduce the cost of home ownership for a borrower and improve profitability for a lender?
MD: For applicants, a higher credit score should mean access to better loan options and lower rates and fees. While best rates have always been important, it matters even more now that affordability is at its lowest point in history.
For lenders, the secret to higher profitability lies in reducing the loan level price adjustment (LLPA) of GSEs, which is made possible by improving credit scores. If you look at the new LLPA tables, you will see that investors reward lenders for lending to less risky borrowers. One measure of that risk is the applicant’s credit score. Therefore, the higher that score, the lower the LLPA and the more money the lender gets when it sells.
HW: How does CreditXpert work with lenders to maximize the credit potential of their borrowers?
MD: Our new enterprise platform for lenders makes it easier than ever to find a credit score, and it turns mortgage credit scores into a strategic growth engine. When approximately 70% of your applicants have the potential to increase their scores by at least 20 points within 30 days, it is important to look at each individual’s potential. Our Artificial Intelligence (AI) quickly identifies an applicant’s mid-score. A single click allows the loan officer to show them their potential and exactly what it takes to get there.
Lenders need to remain laser-focused on closing loans – not tracking applicants and how they are coming along with their credit improvement plan. With the enterprise platform, all LO needs to do is set a due date and share the plan. CreditXpert automatically sends reminders, tracks applicant progress and updates your dashboard. Managers can have an overview of the whole process.
Today’s most innovative lenders use CreditXpert to help them attract more leads, make more competitive offers and close more loans. This means they need tools that help them control and monitor usage, automate processes, and make LO more effective. It’s all built into our new enterprise platform.
