With industry loan volumes already falling, lenders are looking for ways to reach their growth goals. HousingWire recently spoke to Mike Darne, Vice President of Marketing for CreditXpert, who said focusing first on the borrower’s credit holds the key to winning business that other lenders won’t even see.

HousingWire: What opportunities do lenders miss out on by not focusing on credit, especially early in the mortgage origination cycle?

Mike Darne: When I joined CreditXpert back in March of 2021, I started digging into aggregated internal reports that highlighted the credit potential for the millions of inquiries analyzed by our predictive analytics engine. I fully expected to see opportunity for applicants to better their credit scores at the low end of the credit spectrum.

What we actually found was opportunity all over the consumer credit spectrum, from the lowest credit bands to the highest, without exception. The percentage of those that could better their score at the lower bands was very close to that of those in the higher bands. In fact, our data suggests that there is a significant opportunity for 71% of loan applicants with scores below 760 to better their score by at least one 20-point band within 30 days.

The data also suggests that 62% of ALL applicants can do the same, no matter their score. I believe the mortgage industry and the housing market would be very different places if every lender would look at every applicant’s credit score with the perspective that almost two-thirds of those scores could be better. Who could we be lending to that we now aren’t? Which applicants could be saving on their mortgage payments? Which new homeowners could have had more, and perhaps better, financing options?

HW: How does 2022’s anticipated shift from refi to purchase originations place greater importance on credit?

MD: First, if a lender can qualify more of the applicants that come through the door, that’s a win in any market, but especially so in a purchase money market when volumes are dropping. So, knowing from the beginning whether an applicant can better their score and qualify is paramount.

Additionally, the other thing we see in a purchase market is that consumers become stressed by the increased complexity and time constraints when purchasing and financing a home. Applicants want a lender they can trust, and our research suggests that 50% will apply with three or more lenders, in hopes of finding the right lender, and even more for first-time homebuyers. Originators that focus on applicant credit to get them a better deal on their new loan is a great way to build trust and keep the applicant from leaving for another lender. Putting credit first is a great way to “Stop the Shop,” if you will.

HW: What are some strategies lenders should adopt to convert more applicants to borrowers?

MD: The first thing we advocate is that lenders operationalize a Credit First strategy, which drives their LOs to have the credit conversation with new applicants right at the start of the relationship, highlighting opportunities to better their mortgage credit score. While many applicants come to the mortgage process with an idea of their credit score, they have little actual knowledge about their mortgage credit score.

At CreditXpert we make it easy and affordable to empower LOs to see the mortgage credit potential in every applicant, regardless of where they fall on the credit spectrum. LOs can then generate a custom action plan that will help applicants reach a target score.

When the LOs bring this level of transparency to the table, they win trust and loyalty. When word gets around that the LO works to get applicants the best deal, referral business quickly follows.

HW: How does CreditXpert help them do that?

MD: CreditXpert’s proprietary predictive analytics platform analyzes the applicant’s credit to identify opportunities that may better their mortgage credit score. When opportunities are found, which they are for nearly two out of every three applicants, we produce a detailed action plan that applicants can follow to better their scores.

Today, lenders can access the CreditXpert platform through their current credit report vendors. By doing so, lenders can help more applicants qualify for a mortgage, increase their purchasing power, and help well-qualified borrowers secure better risk-based pricing.  Offering the most attractive loan packages to applicants will help lenders win more business in a competitive purchase market.

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