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Solving the credit riddle: providing mortgage professionals and borrowers the tools they need

Empowering mortgage professionals and borrowers with innovative credit-building tools

A new report by IDIQ, a financial intelligence company, details top consumer credit concerns provided by mortgage, real estate, and lending professionals as well as borrowers  themselves. The research included surveys of more than 100 mortgage and real estate professionals, more than 200 prospective borrowers, and a study of proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700.

The report, titled “The Modern Credit Challenge: Mortgage & Real Estate Professional & Consumer Research,” highlights credit health needs from  IDIQ partners and consumer insights. The report also introduces a solution with IDIQ’s newly launched credit-building tool, CreditBuilderIQ®, based on the feedback provided.

Identifying the gap:

Non-prime credit files comprise more than 100 million consumers in the United States. This is a substantial market share of  borrowers, and regardless of  their credit profiles, their dreams of homeownership and favorable interest rates are obtainable – although increasingly challenging due to the interest rate environment, pinched consumer finances, and credit profile pressures. During the last decade there has seen a crop of fintech and analytics tools released to help consumers optimize rates and take control of their credit, but what are consumers saying?

The top-three identified concerns consumers have when it comes to their credit:

  1. Not knowing how to strengthen their credit profile
  2. Catching up on late payments
  3. Having inaccuracies on their credit report

Eighty-two percent of those surveyed noted they want to learn more about how to improve their credit scores,  and 59% said they plan to purchase a car or home in the next year. Despite an ever-increasing number of online tools, consumers still express a desire for more guidance.

Next, IDIQ analyzed proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700. Some highlights:

  • 76% have at least two derogatory marks on their credit report
  • 74% have non-optimal credit utilization
  • 67% have a debt collection on their report
  • 41% have less than five tradelines in their profile

Consumers have various types of reasons that are hindering their ability to qualify for a mortgage or a favorable rate, including lack of information and guidance, poor habits, poor credit utilization, derogatory and collection accounts, and more.  Each borrower’s situation is unique and tackling each one optimally requires a personalized touch. 

As the third area in our investigative journey, IDIQ surveyed industry partners, given their alignment in solving consumer credit challenges.

As IDIQ surveyed industry partners, ranging from mortgage professionals, real estate agents, and lenders, we found the following:

  • 75% want to refer clients to DIY credit-building solutions
  • 70% want the ability to track clients’ credit progress
  • 50% wish current credit-building tools offered a consumer score plan and goals to improve scores

Tying it together:

A large percentage of borrowers are not qualifying for mortgages or optimal rates due to credit challenges. In today’s economy, these credit challenge are reaching historic highs. Despite new advances in analytics and credit offerings, consumers have not found a tool that effectively ties together various credit optimizing tools. At the same time, mortgage professionals and lenders are interested in transparent, effective, plan-based tools to help borrowers achieve the dream of home ownership. 

IDIQ commissioned this report because our mortgage, real estate, and lending partners asked for a credit management tool to educate their own clients about establishing, building, and growing their credit. At the same time, we also identified trends among our consumers that indicated those who were educated about their credit profiles were able to take proactive steps to improve their credit scores.

Because mortgage, real estate, and lending professionals as well as consumers requested a platform that offers personalized credit-building tools, we created CreditBuilderIQ. The platform offers AI-driven interactive credit analysis; personalized score factors; credit reports and scores from all three major credit bureaus; tools to resolve credit report inaccuracies; utility reporting; rental reporting (coming soon); secured card and builder loan guidance; and for business partners, the ability to set score thresholds and receive score trigger alerts.

Bryan Sullivan is the Chief Operating and Financial Officer at IDIQ.

Surya Pochareddy is the Executive Vice President, Strategy at IDIQ.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: [email protected]

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