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Past MBA Chairman Joins Get Credit Healthy Board

Mortgage technology services provider, Get Credit Healthy (a subsidiary of Beta Music Group Inc. OTC PINK: BEMG) has announced that David Kittle, past chairman of the Mortgage Bankers Association, and mortgage banking icon, has joined its advisory board. 


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Kittle is vice chairman and president of The Mortgage Collaborative, an organization which empowers mortgage lenders by facilitating better ?nancial execution andimproved compliance. He is expected to bring invaluable and unparalleled insight to Get Credit Healthy’s one-of-a-kind ?ntech platform which maximizes the loan opportunity for its mortgage lending partners while assisting mortgage loan applicants by providing personalized assistance and resources to improve their ?nancial well-being.


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Kittle began his mortgage-banking career in 1978 with American Fletcher Mortgage Company and built a stellar career in the mortgage banking business over the years. From 2004 through 2010, he served on MBA’s Board of Directors. He is the past chairman of MBA’s political action committee, MORPAC, and former vice chairman of MBA’s Residential Board of Governors. He has also testi?ed fourteen times before Congress and helped the mortgage industry navigate its most tumultuous period in recent memory.


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Elizabeth Karwowski, CEO of Get Credit Healthy, says that Kittle’s addition is the latest in the company’s e?orts to become the industry standard for credit health services. “We’re honored to have David join our advisory board. He is among the brightest minds in mortgage banking and ?nancial services and will be an invaluable asset as we continue to experience our signi?cant growth and industry adoption.”


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Get Credit Healthy (www.getcredithealthy.com) utilizes its proprietary processes, platform, and software to integrate with lenders to make it easier to recapture leads. Developed for and by those with extensive mortgage industry experience, Get Credit Healthy’s platform has facilitated more than $200 million in new loan opportunities while working to increase its network of partners and is looking forward to a very promising future.

Get Credit Healthy Names New Chief Revenue Officer

Beta Music Group Inc. through its operating subsidiary Get Credit Healthy, Inc., a FinTech platform that provides independent mortgage originators with credit resources, education, data intelligence and lead recovery that recently signed an exclusive partnership with DriveitAway to improve the financial health of drivers for Uber (3.0 million drivers) and Lyft (1.4 million drivers) announces the hiring of Jon Hill (Hill) as Chief Revenue Officer.


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Get Credit Healthy is passionate about providing consumers with the tools and resources they need to eliminate debt, build credit, and make sound financial decisions. It is that passion that drove it to create an award winning fintech platform that provides financial institutions with data intelligence and lead recovery that turns credit fall out into funded loans.


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Elizabeth Karwowski, CEO of BEMG subsidiary Get Credit Healthy, stated, “We are excited to have Jon join the Get Credit Healthy leadership team.  He brings a wealth of industry experience at a time when Get Credit Healthy is riding a strong growth trajectory.  His understanding of technology, sales process, and the customer journey will allow us to maximize our growth and will take our platform to new heights.”


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Jon has been in the mortgage industry for 17 years building relationships with many of the top 100 lenders and prominent vendors.  Most recently he served as CEO of Homebird LLC. Homebird delivers a concierge service to consumer direct lenders, pairing buyers with local real estate agents. Homebird is process and systems driven, utilizing tools and technology to create an excellent consumer experience from beginning to end.


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Hill was also responsible for marketing Vitreus, a company that helps streamline the pre-qualification mortgage process.

Prior to Homebird and Vitreus, Hill was Regional Vice President of Business Development of Social Survey and Vice President of National Sales for Equity National Title & Closings (“Equity National”).

“I am truly thankful for this opportunity to take such a unique platform and help expand its reach in the mortgage industry.  Creating the right culture, team environment, and excitement is of paramount importance, and I cannot wait to get started,” stated Jon Hill, Get Credit Healthy’s new Chief Revenue Officer. 

Expanding Homeownership

It’s no secret that low to moderate income individuals enjoy significantly lower rates of homeownership than the rest of the country. It’s also common knowledge that minorities, specifically, black and Hispanic households, are less likely to own homes than other demographics. Federal, state, and local governments have all attempted to remedy these issues.


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The first impactful attempt to level the playing field was the enactment of the Fair Housing Act as part of the broader Civil Rights Act during the 1960’s. The Fair Housing Act made it illegal to discriminate against potential home buyers on the basis of race. After the passage of that legislation, minority home ownership rates did begin to rise but, as of today, rates of homeownership amongst black households are the lowest that they have been since before discrimination was rendered illegal. Although Hispanic households are faring slightly better, they are still much less likely to own their own homes than the rest of the country, as a whole. Although there is no singular variable contributing to this disparity, there are a couple of factors that remain constant.


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Income plays an integral role in widening the gap between minority homeownership and the national average. When considering the reasons for the disparity, many people think that the first, and seemingly most insurmountable barrier to entry is coming up with a down payment. Saving money is difficult for many people, especially for those who are straddling the poverty line. For a single parent who makes less than $30,000.00 per year, the idea of scraping together even a third of that for a down payment on a $40,000.00 house can seem just as daunting and realistic as finding the resources to buy a house two or three times that price. 


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The other factor, however, is often easily overlooked. Many people tend to focus so intently on the financial aspect of the homebuying process, that they often forget that the potential borrower must first demonstrate that he or she has a sufficient credit profile to even merit consideration for a loan. Some might still argue that the credit profile is a secondary consideration; if the potential applicants do not have sufficient income to make a down payment, what difference does it make whether they can qualify for a loan that they can’t afford? However, many are unaware of the existence of programs, such as down payment assistance and mortgage payment assistance, that were established to help get people out of public housing and into homes of their own. 


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Despite the existence of these programs, poor credit is still preventing those who would otherwise qualify for this type of assistance from vacating public housing in favor of their own homes. Fortunately, there are now non-profit entities with which lenders and municipalities can pair in order to get those who are often overlooked the assistance that they need. These non-profits utilize a combination of credit coaching and credit education to instill behavioral changes that lead to sound financial decision making. This type of assistance is often invaluable to those occupying the lowest wrung on the financial ladder, and has the potential to make a multigenerational impact. 

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Not All Credit Scoring Models Are Created Equal

Finding a first-time homebuyer, who actually has the necessary credit score to qualify for a mortgage, is becoming more difficult by the day. According to a study published by the Federal Reserve Bank of New York, more than one-third of Americans have a credit score below 620. What is even more alarming is the CFPB’s study that found in addition to those with poor credit, there are another 45 million adults who are either un-scoreable or who do not even have a credit score.

As consumers try to deal with their credit challenges, they are being bombarded with messages about their credit scores from many different sources.  Some of these companies have even created simulated scores which many consumers find misleading and confusing, especially those who rely on those scores when seeking out financing for a new home.


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Credit Karma is one example of a company that generates scores using the Vantage scoring model (Vantage score 3.0).  Consumers frequently rely on the scores that are generated by this and similar companies before they apply for home or auto financing, only to find out that lending institution utilizes credit reports and scores that were generated from a completely different scoring model. Many people are often surprised to learn that their actual credit score is drastically different from the generated score they received online.  One reason for this is that many simulated or alternative scoring models don’t take the same information into account as the reports on which lenders rely. 

Consumer Example of conflicting credit scores: Potential borrower contacts lender and has lines of credit but DOES NOT show a score.  However, when the potential borrower pulled his credit off a website for free, he had a score in the mid-700’s.  

His specific report pulled by the lender shows NO PAYMENT FOR 8 years.


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The simulated or alternative model could be basing it on the positive payment history, were as the repositories are basing it on current activity.  A FICO Credit Score is a snapshot of what is going on today.  Over the last 8 years, nothing has been going on.  Therefore, no scores appear for this potential borrower. 

Can you picture the confusions and frustration when the lender tries to explain that this borrower doesn’t have a credit score?

It is also important to confirm that your personal information is correct with the bureaus as sometimes information is pulled in and/or NOT pulled into your report.  If something doesn’t report, it’s not included into your FICO score.   


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Therefore, It is critical to help consumers understand that not all credit scores are created equal, especially as it relates to obtaining financing for home ownership.

Here is a brief overview of different credit scoring models, the differences between actual and simulated credit scores, and the importance of knowing your actual consumer credit scores. 

FICO v. Vantage

The FICO score is a score that was formulated to evaluate creditworthiness. It is promulgated by Fair Isaac Corporation and was first utilized by lenders in 1989.  Your FICO score is calculated based upon the following five factors: 1) Payment history, 2) Credit utilization ratio, 3) Length of credit history, 4) New credit accounts, and 5) Credit mix. 


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In 2006, to compete with FICO, the three major credit bureaus developed the Vantage scoring model. This model calculates credit scores using some of the same factors as FICO, but also incorporates some additional information. The Vantage factors include: 1) Payment history, 2) Credit age and mix, 3) Credit utilization, 4) Balances, 5) Recent credit applications, and 6) Available credit. Although Vantage has been making a push in recent years, FICO scores remain the industry standard across various financial sectors for evaluating consumer credit worthiness.  

Actual v. Simulated

It is important to note the difference between actual credit scores and simulated credit scores. There are many websites, such as Credit Karma, that purport to provide consumer credit scores for free. However, consumers should be weary of putting too much credence or relying too heavily on those scores.  

A simulated score is calculated based upon actual information in a consumer credit report, but it may not necessarily reflect your true credit score, which is promulgated by the FICO or Vantage models. There are many instances in which consumers review their simulated scores prior to applying for loan or other financial product, only to find out later that they do not qualify because their actual score is lower than the simulated score. 

Importance of Getting Actual FICO Score

According to FICO, 90 percent of “top” US lenders use FICO scores when evaluating the credit worthiness of applicants. As the predominant scoring model in the US, consumer FICO scores will, more often than not, determine whether a consumer will qualify for the loan or financial product for which he or she is applying. It is imperative that consumers keep this at the forefront of their minds when devising a strategy or making a decision about when and whether they should apply for a mortgage or a car loan. 

Whenever a consumer applies for financing, and the potential lender makes a hard inquiry (pulls the consumer’s credit), that consumer’s credit score is negatively impacted, and will decrease as a result of that inquiry. If a consumer believes that he or she will qualify based upon the simulated score, but is later denied, their credit score will take a hit unnecessarily. 

Because of the deleterious effect that hard credit inquiries have on a consumer’s credit profile, it is imperative that consumers know their actual credit score prior to applying for loans. There are companies that offer monthly subscriptions, which include actual consumer FICO scores that are updated monthly. This type of service is invaluable for those who are serious about achieving and maintain credit health, and eliminating any guesswork when applying for loans.

In addition to accessing actual credit score, here are some ways in which consumers can build and/or improve their credit profile.

Two quick way’s to create a score:

Start using a credit card, if you don’t already. Using a credit card and paying it on time every month is a great way to begin establishing credit history.

For those accounts that are open, make sure to use them periodically.  If you don’t use them, the creditor might close the account down which could have a negative impact on credit score.  

Why do these two ways impact ones credit:

30% affects Utilization. It is best to have several accounts with low balances distributed then it is to have fewer accounts maxed out. To figure utilization: Balance (divided) by Credit Limit = percentage. Lower than 10% recommended per account, this is one of the fastest means for increasing the over all credit score.

15% affects Established History. The longer you maintain open accounts with creditors the better. When first starting out of course this is not easy; but this is where getting added as an Authorized User to another persons established credit comes in best. Remember that the contributor must have an account that has long history; clean payment record; high credit limit, and low balance. Also need to check with the creditor to insure that they have a policy to report authorized user accounts to all three major credit-reporting agencies. Anther great option is getting a secured credit card that reports to all three bureaus.  Try to find options for secured credit cards that do not require to pull credit. 

SPECIAL NOTE to quickly build accounts: Authorized user accounts are the best way to go; since you are not legally responsible for the debt rather than Joint or Co-Signer accounts. Also, if this account starts to report negatively; these accounts are usually easier to remove from the credit reports by either contacting the creditor or requesting termination of the relationship; or disputing through the CRAs.Just because you can pull a score off the Internet does not mean that it is the score that a lender will use to qualify you for home financing.  Remember, not all credit scoring model are the same, especially as it relates to the mortgage industry. 

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Key Factors Impacting Borrower Credit

In today’s mortgage market it is vital that borrowers understand what impacts their credit profile and ability to obtain financing.  Here are some quick tips for borrowers looking to improve their credit profiles.


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Paying Collection Accounts

Believe it or not, it may be counterproductive to pay off an old debt. Under The Fair Credit Reporting Act, negative defaults such as collections are removed from your report after 7 years. Making a payment on an old debt, say from 5 years ago, re-ages that debt and makes it current. Again, this is noted on your file and has a negative impact on your score, causing it to fall. 


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Before taking a course of action to make payment on an old debt, consult a professional. Re-aging old information can have a huge negative impact on your credit score. 

What’s not on your FICO Score?


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Although a FICO score on your credit report has many considerations that are used to determine your credit worthiness, there are many personal items they ignore. U.S. Law prohibits consideration of the following when determining your credit score.

Marital status, national origin, gender, race, religion, the color of your skin, 


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receipt of public assistance, these have no place in the determination of your credit score. 

While other scores might, FICO does not consider your age as a factor. Similarly, employment history, employer, date employed, title, your salary and occupation are not used. However it is worth noting that lenders may consider this information as part of their scrutiny.

The DO’S & DONT’S OF HEALTHY CREDIT

The “DO’s”?

>>Do pay your bills on time.?

>>Do keep credit cards balances low (try to keep balances under 1/3 of your ?current credit limit.?

>>Do pay off debt rather than opening and moving balances between credit cards.?

>>Do apply and open new credit cards (ONLY when NEEDED).????

THE DON’T

>>Do NOT max your credit cards.

>>Do NOT miss a credit card payment. 

>>Missing a payment because you forgot not only impacts your credit score negatively, but also can affect your interest rate for that card.

>>Do NOT have your credit report pulled multiple times within a short period.

>>Do check your credit report at least once a year for accuracy and completeness of information.?

These are just a few tips that can help borrowers improve their credit profiles.  For more information or to speak with a credit coach visit www.getcredithealthy.

About The Author

Gain One-Click Access To Improving Borrower Credit Profiles

Beta Music Group Inc. through its operating subsidiary Get Credit Healthy, Inc., a FinTech platform that provides independent mortgage originators with credit resources, education, data intelligence and lead recovery has partnered with ARIVE, a platform that offers the first of its kind mortgage marketplace designed to allow independent mortgage originators access to lenders, borrowers, and third-party vendors in a seamless ecosystem.


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Through a partnership with AIME, the Association of Independent Mortgage Experts, ARIVE will provide independent originators with the connections and tools to both compete in a crowded marketplace and serve increasingly tech-savvy borrowers nationwide.  Lenders and third-party providers want to make it easy for their customers, and AIME is over 35,000 strong. 


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ARIVE has multi-year contracts with a network of more than 20 wholesale lenders. That includes five of the top ten wholesale lenders in the country: United Wholesale Mortgage (#1), Caliber Home Loans (#2), Stearns Lending (#3), Flagstar Bank (#7) and Home Point Financial (#8). Combined, these lenders make up nearly half of wholesale market share. Top Renovation Lender AFR Wholesale, Reverse Lender Finance of America Mortgage, and Paramount Residential Mortgage Group (PRMG) are among the additional 20 wholesale lenders connecting to ARIVE.


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Elizabeth Karwowski, CEO, stated, ” We are extremely excited to partner with ARIVE to deliver one-click access to a host of credit services and solutions to assist the ever growing number of Independent Mortgage Originators on the ARIVE platform”


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Today’s fiercely competitive financial services market challenges originators like never before. Heightened pressure to create new loan opportunities, reduce prospect lead fallout, and provide better pipeline visibility poses a significant burden on independent mortgage originators.

To thrive under these market conditions requires a revolutionary new solution that transforms a currently untapped market into a well-qualified, well-informed applicant pool. Get Credit Healthy converts fallout into funded, helping independent mortgage originators close more loans while providing them with a significant competitive advantage. ARIVE, LLC., is a private technology company based in Philadelphia, Pennsylvania. Conceived as an engine to drive mortgage technology into the future, ARIVE offers the first of its kind mortgage marketplace designed to allow independent mortgage originators access to lenders, borrowers, and third-party vendors in a seamless ecosystem.

New Compliance Trends

The United States has made great strides towards equality in many aspects of life since the civil rights movement of the 1960’s. The housing industry, though, is one area in which we as a country have historically struggled to achieve the desired results. Congress passed two key pieces of legislation aimed at leveling the playing field in the industry. The Fair Housing Act was passed as part of the broader Civil Rights Act in 1968. This law made it illegal for banks to discriminate on the basis of race when evaluating mortgage applicants. Prior to its passage minorities were often unable to obtain loans from most banks, as systematic discrimination was commonplace. 


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Although the Fair Housing Act illegalized overt racial discrimination, it did little to resolve the disparate impact of some other common lending practices. Many banks began to engage in what is known as “redlining” in what they designated as high-risk lending areas.  The practice of redlining is exactly what it sounds like: banks would literally draw a red line around certain areas of states or cities and refuse to lend to people in those areas. Those redlined areas tended to be home to very low to moderate income individuals and families and, more often than not, those neighborhoods were occupied predominantly by minorities. 


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Lending institutions abolished their explicitly discriminatory lending policies, but the racial discrimination that the Fair Housing Act was enacted to prevent was still taking place under the guise of risk-based lending. In response, Congress enacted the Community Reinvestment Act in 1977, which not only made redlining illegal, but compelled banks to lend and invest in those low to moderate income communities and neighborhoods. Although the law was enacted with the greatest of intentions, it has proven to be woefully inefficient in narrowing the housing gap for low to moderate income families, specifically minorities. Furthermore, many lending institutions struggle when trying to internally evaluate performance ahead of regulatory reviews because of the lack of definitive guidelines and frequent implementation of revisions.  


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The CRA Tests

Every FDIC insured bank is responsible for meeting requirements promulgated by the Community Reinvestment Act and is subject to review from regulatory agencies. As discussed above, the goal of the Act is to help low to moderate income Americans and traditionally underserved communities. The definition of “low to moderate income” varies based upon the geographic regions in which institutions operate, as they fluctuate based upon average income for those specific areas. In areas with high costs of living and higher average incomes (such as New York), the poverty line is higher than it would be in areas with lower average income and cost of living (such as Wichita, Kansas).


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The region in which the lending institutions operate is not the only variable that affecs lenders’ scope of responsibility under the CRA. The size of the institution also dictates the stringency of the requirements to which they are subject. The larger the institution (the greater the assets) the more resources it must devote to meeting the three compliance tests. Those tests are: 1) the Lending Test; 2) the Investment Test; and 3) the Service Test. For each test, regulators will give scores of “Outstanding”, “Satisfactory”, “Needs to Improve”, and “Substantial Noncompliance”, and then will give an overall score to denote the institution’s level of general compliance. In this section we will discuss what regulators look at for each test. 

The Lending Test is the most straightforward of the three. When evaluating compliance, regulatory bodies look at the dollar value of loan to deposit ratios for the institutions’ low to moderate income clients. The higher the dollar value of loans to total deposits, the higher the score will be given to the institution being evaluated. One of the most common problems many lending institutions face when it comes to CRA compliance is the lack of definitive guidelines regarding grading thresholds for the three tests. Most lenders are able to develop compliance targets internally based upon past experience, but are always on edge due to the uncertainty about which rubrics regulatory agencies employ when evaluating performance. Although there is no bright-line test, Kenneth H. Thomas, president of Miami-based Community Development Fund Advisors, and former lecturer at the University of Pennsylvania’s Wharton School, has formulated his own thresholds based upon his extensive experience in the industry. He surmised that in order for an entity to achieve a score of “Outstanding” on the lending test, it must have a loan to deposit ratio of at least 80%. 

The second test that lending institutions must pass is the Investment Test. This test looks at the qualified investments that are made in low to moderate income service areas. This test, however, doesn’t simply look at the dollar value of the investments. Although the amount of investment is important when evaluating compliance under this test, regulatory agencies look deeper in order to ensure that the investments are impacting these communities in a meaningful way. Regulators judge the innovativeness and complexity of each investment to encourage investors to thing about novel ways to remedy problems that have traditionally plagued these communities. Lenders are also required to make investments that are responsive to the development needs of these communities. Because adversity faced by beneficiaries of this law vary widely in each geographic area, there cannot be a “one size fits all” method of investing. Regulators want investors to seriously consider the needs of each community in which they invest. Again, although there are no definitive guidelines regarding how much is enough, Thomas suggests that in order to achieve an “Outstanding” rating, lenders should looks to invest 1% of review period assets. 

The last test under which lenders are evaluated is the Service Test. This test looks at the type and number of retail and community development services that banks provide to each low to moderate income service area. Like the Investment Test, this test doesn’t just the number of services into account. Lenders must provide services that are innovative and responsive to the needs of each community in which they are offered. From his experience, Thomas recommends that lenders who wish to attain an Outstanding score must offer 12 services per year per billion dollars in assets.

Despite numerous regulatory bodies and agencies offering overviews and some guidance regarding compliance with CRA requirements, many lenders are still in the dark about what they need to do to receive Outstanding scores because of the lack of definitive compliance standards. Approximately 90 percent of lenders were given an overall grade of satisfactory, while less than 10 percent were able to attain Outstanding marks. These statistics prove that despite devoting significant time and resources to CRA compliance, lenders still struggle with implementing programs that unequivocally meet regulatory standards. 

CRA Compliance Efficacy

When compiling a CRA requirement plan, lenders should seek to implement programs that will not only help the community, but will empower those who the CRA aims to help to become homeowners. For instance, many low to moderate income consumers struggle with credit. There is a demonstrable need for services that provide credit education and remediation in those communities. Many lenders have already begun to partner with non-profit entities that provide these types of services for applicants who do not have the necessary credit scores to qualify for the financial products that they seek. If those same lenders partnered with non-profits to provide those same services at no cost to low to moderate income communities that they serve, it would help them meet the requirements of not one, but two CRA tests. Funding a credit remediation program such as the one described above would obviously sere to help meet the requirements under the Service Test. However, once those low to moderate income households or individuals build their credit profile, they could qualify for mortgages or various other financial products, which would help that same lender meet Lending Test requirements as well. Lenders should begin thinking creatively an order to make strategic to investments to ensure that they are positioned to receive some type of benefit from the resources they are already devoting to community development. 

About The Author

Explaining Credit Score Models

This article will provide a brief overview of different credit scoring models, the differences between actual and simulated credit scores, and the importance of knowing your actual consumer credit scores. 

FICO v. Vantage

Your FICO score is a score that is meant to evaluate creditworthiness. It is promulgated by Fair Isaac Corporation and was first utilized by lenders in 1989.  Your FICO score is calculated based upon the following five factors: 1) Payment history, 2) Credit utilization ratio, 3) Length of credit history, 4) New credit accounts, and 5) Credit mix. 


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In 2006, to compete with FICO, the three major credit bureaus developed the Vantage scoring model. This model calculates credit scores using some of the same factors as FICO, but also incorporates some additional information. The Vantage factors include: 1) Payment history, 2) Credit age and mix, 3) Credit utilization, 4) Balances, 5) Recent credit applications, and 6) Available credit. Although Vantage has been making a push in recent years, FICO scores remain the industry standard across various financial sectors for evaluating consumer credit worthiness.  

Actual v. Simulated

It is important to note the difference between actual credit scores and simulated credit scores. There are many websites, such as Credit Karma, that purport to provide consumer credit scores for free. However, consumers should be weary of putting too much credence or relying too heavily on those scores.  A simulated score is calculated based upon actual information in a consumer credit report, but it may not necessarily reflect your true credit score, which is promulgated by the FICO or Vantage models. There are many instances in which consumers review their simulated scores prior to applying for loan or other financial product, only to find out later that they do not qualify because their actual score is lower than the simulated score. 


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Importance of Getting Actual FICO Score

According to FICO, 90 percent of “top” US lenders use FICO scores when evaluating the credit worthiness of applicants. As the predominant scoring model in the US, consumer FICO scores will, more often than not, determine whether a consumer will qualify for the loan or financial product for which he or she is applying. It is imperative that consumers keep this at the forefront of their minds when devising a strategy or making a decision about when and whether they should apply for a mortgage or a car loan. 


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Whenever a consumer applies for financing, and the potential lender makes a hard inquiry (pulls the consumer’s credit), that consumer’s credit score is negatively impacted, and will decrease as a result of that inquiry. If a consumer believes that he or she will qualify based upon the simulated score, but is later denied, their credit score will take a hit unnecessarily. Because of the deleterious effect that hard credit inquiries have on a consumer’s credit profile, it is imperative that consumers know their actual credit score prior to applying for loans. There are companies that offer monthly subscriptions which include actual consumer FICO scores that are updated monthly. This type of service is invaluable for those who are serious about achieving and maintain credit health, and eliminating any guesswork when applying for loans.


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About The Author

Be A Hero, Outmaneuver, Outperform, Outlast

One of the most common concerns weighing on loan officers across the country is the rising cost of lead acquisition in the face of a steady decline in mortgage applications. An increase in home prices across the market is taking its toll on the number of consumers actively applying for a mortgage. According to reports released by the Mortgage Bankers Association, mortgage applications have fallen a staggering 17 percent from only a year ago, and experts surmise that the rising purchase prices are playing a major role. To compound the problem, refinancing applications have also continued to trend downward, and are the lowest they’ve been since the end of 2000. When you combine these statistics with the ever-increasing cost of origination, it paints a bleak picture for lenders and loan officers. 


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The question has now become, “how can lenders weather these arduous trends to outmaneuver, outperform, and outlast the competition?” Because the number of applications is down, overall, one of the best available solutions is forming of strategic partnerships that will allow lenders to wring all possible value out of those leads that are available by increasing the rate and percentage of conversion. I know this sounds much easier said than done, but if lenders are able to step back to gain some perspective regarding why their leads are failing to transition into successful applications, the problem becomes much easier to solve. 


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Subpar credit scores are one of the leading hindrances to being approved for a mortgage. According to a 2016 study published by the Federal Reserve Bank of New York, more than one-third of Americans have a credit score below 620. Even more alarming, the CFPB published a study in 2015 that found in addition to those with poor credit, there are another 45 million adults who are either un-scoreable or who do not have a credit score. Because the number of applications is down, in general, its is now more important than ever to find creative ways to overcome a low credit score for those applicants who would otherwise qualify for a loan.


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We are beginning to see the emergence of non-profits that specialize in credit remediation and rehabilitation. Those third-party rehabilitation companies provide services to consumers at no cost to the lenders. This allows those lenders to steer their potential clients toward the assistance that they need to qualify without expending any additional resources, rather than the alternative of simply rejecting potential business. Those lenders who are able to stretch their dollar the furthest by making the most of the leads that they do receive, are the ones who will enjoy the most success in this market and live to see the day when it starts trending in a more favorable direction.

About The Author

Decrease Your Loan Fallout

There are several market conditions at play that make it harder for lenders to reduce their fallout, but it doesn’t have to be that way. Get Credit Healthy is a leading Fintech company that provides an award-winning technology platform that delivers a proven methodology to maximize business opportunities for Lenders, Financial Advisors, Municipalities and Consumers. At Get Credit Healthy the company’s highly skilled staff of business opportunity experts help create millions in new loan opportunities for lender partners. Get Credit Healthy is a disruptive and award winning platform that transforms a currently untapped market into a well-qualified, well-informed applicant pool that desires and more importantly, qualifies for the financial products offered in the market today.

Get Credit Healthy is an organization that provides consumers with the tools and resources they need to eliminate debt, build credit, and make sound financial decisions. Unlike similar companies that only treat symptoms, Get Credit Healthy operates under the philosophy that the only way to break individual and systemic cycles of poverty is to treat root causes of financial difficulties. The company believes that the only way to truly help consumers become financially healthy is to educate and change their behavioral and mental approach to their financial health.

Get Credit Healthy allows consumers to physically see how their decisions and actions impact their financial well-being, while also providing a practical education. In addition to coaching, the consumer also has access to a plethora of resources such as webinars, live telephonic sessions with credit specialists, and interactive educational materials. The company’s CEO Elizabeth Karwowski discussed how she sees the mortgage market evolving here…


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Q: Today’s housing market is drastically different from the market of just 10 years ago. In your opinion, what are some of the biggest challenges that lenders are facing today?

ELIZABETH KARWOWSKI:That’s a great question because you can’t really begin to formulate and fine-tune business strategies until you are able to understand difficulties common to most lenders in today’s market. Business development has always been a challenge; if it was easy, everyone could do it. However, it is becoming much harder to generate quality leads. Every day we are seeing a greater shift from a refinance market to a purchase market. Many loan officers who are accustomed to generating new streams of revenue, in house, are now having to start from scratch when trying to attract new sources of business. Lenders are being forced to devote more time and resources, pecuniary and otherwise, to lead generation. Another major concern for many of the loan officers is the rising cost of lead acquisition. Quality leads are becoming harder and harder to come by, and the demand is driving the price up. When you couple this extra cost with another major problem, the lack of qualified applicants, the cost of origination increases such that it has become a barrier to entry for fledgling companies looking to establish a foothold in the contemporary marketplace.

Q:You raised some very interesting points, especially with regard to the shift to a purchase market. Could you expand a little more on why that shift is so significant to lenders?

ELIZABETH KARWOWSKI:Of course. It’s always easier to generate business from sources or people with which you or your organization has established a relationship or rapport. Logic would also dictate that a consumer with which your organization had a successful, prior business relationship has a higher percentage chance qualifying for the financial products that you’re offering than someone else chosen at random. What we are seeing now, is that many lenders must, increasingly, rely on third party sources for leads that are often proving to be of lower quality. I think this can be attributed to the changing paradigm regarding home ownership. What used to be known as the “American Dream” of owning your own home, no longer resonates with the younger generation which, traditionally, would have made home ownership a top priority. Many of the potential first time home buyers who are applying for mortgages are at a stage later in life where previous financial difficulties and low credit prevented them from purchasing a home. Some of these people were able to overcome those financial hurdles, but many are not equipped with the resources or financial IQ to put themselves in position to qualify for a mortgage. Lenders are becoming frustrated because the applicants that are willing do not qualify, and those consumers who do qualify are not willing.


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Q: That makes a lot of sense, and it’s unfortunate that younger generations do not place more value on home ownership. You did mention, however, that there are many consumers who still want to buy, but are not qualified. How does this affect the cost of lead acquisition?

ELIZABETH KARWOWSKI:Well, in this industry, credit scores that fall outside of qualifying ranges are one of the common challenges to the successful conversion of leads. Leads that look attractive because the applicant has decent income or other assets, are all too often coupled with disqualifying credit scores. According to the Federal Reserve Bank of New York, more than one-third of all Americans have a FICO score of 620 or below. 

That number is staggeringly large, and has huge implications in terms of price per lead and the cost of origination. Many institutions are spending thousands of dollars, and in some cases tens of thousands of dollars, on leads every month. If one third of those leads have less than qualifying credit, then lenders have essentially payed 33 percent more than initially thought for the applicants who do have a qualifying score, with no guarantee they’ll otherwise qualify or ultimately opt for the product for which they applied. 

In an effort to remedy this problem, lenders have begun forming strategic partnerships with organizations that specialize in credit remediation and that are able to rehabilitate consumers’ credit profiles in order to get them qualified. These organizations often offer their services at no cost to the lenders, and provide an avenue through which those lenders are able to recapture leads that would have otherwise fallen by the wayside. This strategy allows lenders to drive the price per qualified lead, and overall cost of origination, down by providing a larger qualified applicant pool for the loan officers to work with. 

Q:That is an interesting statistic; I would not have guessed that many people are affected by poor credit. What are your thoughts on consumer credit health at a macro level?

ELIZABETH KARWOWSKI:Well, it is nowhere near as healthy as it could be. Although we are all aware of the credit system and how big of a role it plays in our daily lives, very few of us possess a critical understanding necessary to successfully navigate the credit landscape. Most people, through no fault of their own, simply lack the tools required for self-help. As I previously mentioned, 33 percent of all consumers have a score below 620, but what is even more alarming is that a study conducted by the Consumer Financial Protection Bureau revealed that over 45 million adults either do not have a credit score or are un-scorable. Think about that for a second. There are 300 million people in this country (that includes children), and 15 percent of them do not have a credit score. Those two statistics, alone, should be sufficiently indicative of the difficulties faced by lenders in today’s market.

To compound the problem, the reactionary measures taken by governmental bodies and financial institutions, themselves, after the 2008 recession have increased the grade of what was already an uphill battle for loan officers. In some cases, increased regulation was warranted but, in many others, consumers who would have qualified in the past because they were able to demonstrate that they had the means to meet their financial obligations are denied every day, irrespective of their actual ability to pay back those loans. This is because credit scores are now weighed so heavily. 

So, to answer your question, I think there is certainly room for improvement. Many of those Americans who find themselves in less than ideal circumstances as they pertain to credit lack the resources and tools necessary to improve their standing. With a little guidance, those consumers could take the remedial measures necessary to qualify for a mortgage or reach their other financial goals. 


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Q:Well what types of resources or tools do those consumers need? If those consumers are able to improve their credit health, I’m sure it could create a lot of opportunity for lenders.

ELIZABETH KARWOWSKI:You’re absolutely right. That pool of unqualified applicants represents a wealth of potential business for lenders. The bottom line is that the credit system in this country, in terms of what decisions impact your credit both, positively and negatively, can be very difficult to comprehend for most people. The emphasis that is placed on consumer credit scores during the evaluation process is often what determines whether or not an applicant will be pre-approved. From personal experience, I have seen successful businessmen and women, with high paying jobs, denied for a mortgage because their credit was a mess. They could have easily afforded the payments on the mortgages for which they applied, but were denied solely because of their credit profiles. The reason I bring this up is to emphasize that credit is not just a problem for the impoverished, it affects all people of all socioeconomic classes, from all walks of life. 

The good news is that credit coaching and education can go a long way in helping those consumers rehabilitate their credit. The methods by which credit bureaus calculate credit scores are often counterintuitive and, without the proper guidance, many people unwittingly wind up hurting their scores when they attempt to improve them independently. An example that I like to use, and what I encounter constantly, is when a consumer tries to raise his or her credit score by paying off a delinquent account. Let’s say that there is a delinquent account on your credit report that has been there for several years. It’s perfectly rational to think that if you pay that debt off, you would raise your credit score; you owe someone money, you pay it, so your score should go up because you’re no longer indebted to that creditor. However, paying off that account, which has been dormant for several years, can have an absolutely devastating effect on your credit score. By making a payment, you essentially “reset the clock” on that debt and, in doing so, can drop your credit score anywhere between 50-100 points. 

Credit is analogous to fields like law or finance. If you’re not a lawyer or an accountant, you wouldn’t litigate a complex business case or perform a financial audit on your own company. Well, the same holds true for credit. In order for a consumer to improve his or her credit profile and credit score, he or she should engage a professional who is well versed in the field, and who is capable of accurately assessing a credit profile, and providing solutions that will actually result in positive changes to that profile. 

Q:Well if consumers shouldn’t be attempting to fix their own credit, is there anything lenders could do to help?

ELIZABETH KARWOWSKI:Of course. Lenders are uniquely positioned to help their prospective clients. Through their interaction with an applicant, a lender learns about that applicants’ goals, which products will allow that applicant to reach those goals, and what that applicant needs to become qualified for those products. As I mentioned before, if the lenders are able to form partnerships with organizations that specialize in this type of credit rehabilitation, they could steer their potential clients toward the guidance and resources needed to help that applicant become qualified for the lender’s financial products. Several of these organizations are not-for-profit and were established to help consumers, but lenders are quickly becoming indirect beneficiaries.  

Q: You’ve brought up these partnerships with credit remediation companies several times, but is there any reason that the lenders cannot help their applicants, themselves?

ELIZABETH KARWOWSKI:That’s a great question, and the answer is that there are several reasons that lenders should be weary of assisting consumers in-house. The most obvious reason that comes to mind is that most lenders would find themselves in violation of federal law, specifically, the Credit Repair Organizations Act, or CROA for short, if they began helping these consumers fix their scores in-house. 

CROA is a law that was promulgated to regulate the credit repair industry and sets forth requirements by which credit repair organizations must abide when performing credit repair services. When I bring this up to lenders, I usually get “but this is not a credit repair company” as a response. The issue is that by definition, any organization that provides advice to consumers about how to improve their credit, and stands to gain, financially, as a result of providing that advice is a “credit repair organization” under the law. What this means, in practical terms, is that if a loan officer provides advice to an applicant about how that applicant could raise his or her credit score in order to qualify for a loan, that advice, no matter how well-intentioned, could result in that company being classified as a credit repair organization. If that happened, that lender would then be required to meet all requirements under the law and could potentially be subject to unwanted and unintended liability, including lawsuits from both, consumers and the CFPB. 

Lenders may also lose their ability to pull credit as another unintended consequence of performing these services in-house. Many providers of independent verification services explicitly prohibit those businesses to which they provide services from engaging in credit repair. Because these types of prohibitions are commonplace across the industry, lenders could very likely run afoul of these covenants, which would obviously have devastating consequences.

Finally, by partnering with organizations that specialize in this field, lenders are able to free up time, money, and resources for business development and other areas of need. If those non-profits are providing services to consumers at no cost to lender, then it doesn’t make much sense for lenders to undertake this task themselves, especially in light of the aforementioned potential consequences that we just discussed. 

Q: If lenders are interested in forming these types of partnerships that you discussed, what are some attributes that they should look for in a potential partner?

ELIZABETH KARWOWSKI:First and foremost, lenders should do their homework to ensure that they only select organizations that have a proven track record and are actually capable of providing consumers the competent assistance that they need. Any partner should not only provide credit remediation services, it should be a full-service company that provides consumers with a wealth of resources such as credit education and one on one guidance to help ensure a successful outcome for the referred consumers. 

Lenders should also ensure that there are mechanisms in place so that the lender is able to monitor referrals’ progress. Everything should be measured to track results.  This will also allow the lender to keep in contact with the referral throughout the remediation process, and will make it easier for the lender to recapture the leads that they’ve referred once that lead reaches his or her goal and becomes qualified for the desired product. 

INSIDER PROFILE

Elizabeth Karwowski is the CEO of Get Credit Healthy, a technology company that has developed a proprietary process and solution, which seamlessly integrates with the lenders’ loan origination software (LOS) and customer relationship management software (CRM) in order to create new loan opportunity and recapture leads. Get Credit Healthy helped their partners create over $200M of new loan opportunities in 2017 alone, and plan on continued growth in 2018. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, and published in a number of financial industry publications.

INDUSTRY PREDICTIONS

Elizabeth Karwowski thinks:

1. Competition is not going away in the mortgage industry. Lenders will continue to see rising cost to acquire leads causing margin compression.

2. The large amount of information on credit is not shrinking, it’s just making it even more confusing. Did you know some credit score models now go to 990? What happened to 850? Consumers are overwhelmed. We have not made the process to educate consumers EASY, digital, or interact.

3. Lenders will continue to spend large amounts of money to meet their CRA (Community Reinvestment Act) requirements if they don’t change the way they do things. Need to leverage technology and find ways to tap into different pool of people without spending a fortune.