Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Mike Darne, vice president of marketing for CreditXpert, to discuss how lenders can use credit to increase affordability and profitability.

HousingWire: How many prospective homebuyers could improve their credit score within the origination cycle?

Mike Darne: Our predictive analytics engine shows that nearly 70% of all mortgage applicants, across all FICO scores, could improve their credit scores by at least one 20-point credit score band within 30 days if they take the simple actions outlined in a plan we generate specifically for them.

In a purchase market — like we’re in today — this improvement can be achieved within the normal mortgage origination cycle.

It’s also important to note that what we do is not credit counseling. Those working with a credit counselor can take years to impact their credit score enough to make a difference. We’re also not credit repair which can take months and cost applicants hundreds to thousands of dollars in fees to yield a result. 

CreditXpert is a data science company. Our proprietary predictive analytics engine has been trained on nearly one billion credit inquiries. This means that the improvement potential we show applicants and the detailed plans that help them realize that potential is highly accurate and can be achieved in a short period of time.  

HW: What can a prospective homebuyer do to improve their credit score?

MD: It really depends upon their situation. The recommendations are a combination of actions that are specific to an applicant’s credit file. This may include paying down balances, closing accounts, opening accounts or removing authorized users.    

That we have analyzed nearly one billion credit inquiries offers us deep insight into what actions make a difference for each individual borrower. This specificity is important because applicants have very little insight into how their scores are derived, and they often have no idea what actions to take to improve them. 

Our plans provide specific action steps that applicants can take to improve their credit and highlight the likelihood of reaching the target score. This likelihood is displayed right on the reports. When applicants take the actions we suggest, they see results.

The one thing they can’t or shouldn’t do is guess and expect to see a good result. Random credit improvement actions rarely work as imagined and can have an adverse impact on credit scores. This is the exact opposite of what applicants and lenders want during the mortgage process. Our analysis and reports give them detailed actions that work. 

HW: How can a higher credit score both lower the cost of homeownership 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 the best rate has 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 GSE’s Loan Level Price Adjustments (LLPA), which is possible by improving credit scores. If you look at the new LLPA tables, you’ll see that the investors reward lenders for lending to less risky borrowers. One measure of that risk is the applicant’s credit score. So, the higher that score is, the lower the LLPA and the more money the lender gets for the loan when they sell it.

HW: How does CreditXpert work with lenders to maximize the credit potential of their borrowers?

MD: Our new enterprise platform for lenders makes optimizing credit scores easier than ever before, and it turns mortgage credit scores into a strategic growth engine. When almost 70% of your applicants have the ability to increase their score by at least 20 points within 30 days, it’s important to look at everyone’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 will take to get there.

Lenders need to stay laser-focused on closing loans — not keeping tabs on applicants and how they are coming with their credit improvement plan. With the enterprise platform, all LOs need 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 entire 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 will help them control and monitor usage, automate processes and help LOs be more effective. All of that is built into our new enterprise platform.