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.

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. 


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.


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.

Keeping Turned Down Borrowers In Your Pipeline

The difficulty of establishing and maintaining a reliable pipeline of new business has become readily apparent across the mortgage industry. Low credit scores, subpar credit profiles, and rising cost of lead generation and acquisition have taken their toll on the price per lead and, consequently, the total cost of origination. Furthermore, the shift from a refinance to a purchase market has only made it more difficult to drum up new business, adding to the frustration experienced by many loan officers in this sector.

In years past, loan officers relied heavily upon in-house generation of leads. Those leads were typically of higher overall quality, and the prior business relationships removed many of the barriers to conversion common to novel sources of business. However, as many in the mortgage industry are now being forced to look outside of their own organizations for new sources of business, they are often stymied by the sheer number of consumers who simply do not qualify for financial products because of their credit profiles.

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According to a report published by the Federal Reserve Bank of New York, more than one-third of all Americans have a FICO score of 620 or below. Furthermore, the Consumer Financial Protection Bureau revealed that over 45 million adults either do not have a credit score or are un-scorable. There are 300 million people in the United States (that number includes children), and 15 percent of them do not have a credit score. All too often, banks simply tell those people who fall outside qualifying parameters that they do not have the necessary credit, and implore them to come back if and when their circumstances change. There are no mechanisms in place to assist these potential clients, and the time and resources spent acquiring and attempting to convert those leads is seemingly wasted.

The question that every lender and loan officer should be asking themselves is: “Is there any way to salvage even a fraction of those rejections by turning them into qualified applicants?” The answer is yes, and the best way to go about doing so is to form strategic partnerships with entities that specialize in credit remediation and rehabilitation. By forming those partnerships, lenders are able to tap into a previously inaccessible market, while broadening the spectrum of customer services that they offer to current and prospective clients and remaining compliant with various federal regulations.

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Some lenders have recognized the need to steer unqualified applicants toward resources that could help them improve their credit, but have reservations about forming these partnerships with third parties. One of the main reasons that loan officers are reluctant to refer a lead to a third party is because they fear relinquishing control over a lead in which they’ve already invested considerable resources. This is why it is imperative to partner only with those organizations that offer a completely transparent rehabilitation process, and which allows the referring lender to maintain its control at every stage of the remediation process.

Ideally, the loan officer should receive assurances from its referral partners that the lead will not sold or referred to any entity other than that which referred the lead. Additionally, lenders should insist upon periodic progress updates when the referral reaches certain milestones. This type of system will allow the lender to decide how interactive it should be throughout the remediation process. Smaller lenders with limited resources may wish to simply monitor progress, while those larger lenders with greater availability of human capital may wish to be very “hands-on” in order to build a stronger rapport with their referrals. Regardless of which tactic lenders decide is best for them, it is imperative that every referring lender receives notification immediately upon the referrals’ completion of the remediation program, so that those lenders can re-capture those leads when they become qualified for the loans for which they initially applied.

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Many lenders are also beginning to toy with the idea providing remediation services, themselves, in an attempt to assuage their own fears associated with referring leads to third party partners. However, many do not realize that if they were to offer these types of services, or even provide advice regarding self-help, they could be reclassified as a “Credit Repair Organization” under federal law. If this were to happen, it could impute unwanted liability. A financial institution that gets reclassified could face fines or other penalties for failing to comply with stringent regulations imposed upon organizations or individuals who provide those types of services or advice. Forming partnerships with reputable companies that routinely provide this type of assistance would ensure that lenders are able to protect and insulate themselves, while still providing a service that many applicants need.

Aside from converting those leads that would have otherwise been unqualified into viable sources of business, strategic partnerships with third party credit remediation companies offer numerous benefits to lenders that are not as obvious. Lenders should be able to outsource the entire credit remediation process without devoting any additional resources, whether pecuniary or otherwise, to those leads that were initially unqualified. Upstanding companies should never charge lenders a fee for their services. When lenders are able to recapture unqualified leads it decreases both, the cost per lead and the average cost of origination, which are two common goals that every lender strives to meet.

Some of the more seasoned lenders may have reservations about working with credit remediation companies or making overarching changes to their business practices and policies. This is understandable, considering that they have enjoyed past success operating as they always have. However, as the industry landscape changes, lenders must adapt in order to maximize the increasingly limited opportunities that present themselves. A strong pipeline to a previously underserved, untapped market will certainly benefit those who have the foresight to access it early to take advantage of the new source of business. Strategic partnerships such as those described herein are one of the best ways to do just that, and will yield a net benefit to lenders, as they do not require the expenditure of precious resources that would be better spent on in other areas of business development. As the marketplace becomes ever more crowded, and the cost of origination continuously narrows profit margins, the adage “adapt or die” has never resonated so clearly.

About The Author

Creating Borrowers For Life

Ever since the housing market took a hit back in 2008, the industry has been struggling to bounce back. The imposition of stringent federal regulation, coupled with shifting priorities for younger demographics that have, historically, held home ownership in high regard have taken their toll on lenders’ bottom lines. Lead generation is getting more expensive by the day, while the overall quality of those leads is slowly deteriorating.

The most frustrating aspect of the mortgage landscape, however, is that those leads that could potentially be converted into new business are falling by the wayside because of sub-par credit scores. To those in the lending industry, it’s common knowledge that poor credit is one of the most common hurdles consumers face when it comes to homeownership. The Federal Reserve Bank of New York conducted a study in which it concluded that over one-third of all Americans have a FICO score below 620. One third; that translates into over 90 million people (only takes those over the age of 18 into account). To compound that statistic, the Consumer Financial Protection Bureau estimates that there are another 45 million people who do not even have a credit score. There is little doubt that lenders in today’s market are fighting an uphill battle.

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Loan officers across the country are forced to turn thousands of potential clients away every single day because their credit scores fall just short of the qualifying threshold. When an applicant’s credit score is ten, twenty, or thirty points short of the score required for eligibility, many lenders are tempted to intervene and advise those would-be clients to take remedial steps to raise their scores. The advice could be something as simple as paying off a credit card to lower their debt to credit ratio, or disputing a delinquent account that the prospective client maintains was reported incorrectly. These minor steps might be just enough raise the applicant’s credit score, qualify them for a mortgage on their dream house, and earn the lender a life-long client. However, few lenders realize that providing this type of advice to consumers, no matter how well intentioned, could subject the loan officer and the organization for which he or she works to serious liability from both, the federal government and the consumers to which the assistance was provided.

The Credit Repair Organizations Act (“CROA” or the “Act”) is a federal law, which falls under the broader Consumer Protection Act. Under CROA, any person or entity that provides any advice or assistance to any person with the goal of improving their credit in exchange for valuable consideration (i.e. the sale of financial products) can be classified as “credit repair organization” under the law, even if they’re not being directly compensated for providing that advice. A reclassification of this nature could have a devastating impact on any organization that engages in the practice of providing this or similar assistance. Once a company is classified as a “credit repair organization”, it becomes subject to all of the stringent requirements imposed by the other provisions of the statute, which, if credit repair were not the main focus of that lender’s organization, would almost certainly mean that the lender is conducting its business in violation of the law. The Consumer Financial Protection Bureau has begun to take an interest CROA cases, and has already reached seven-figure settlements with several companies that have run afoul of the statutory provisions.

In addition to potentially being subject to governmental backlash, many lending organizations that provide this type of assistance to their potential clients also risk being stripped of their ability to pull credit. Surprisingly, few people in the industry are aware that many of the largest providers of independent verification services require lenders to certify that they do not engage in credit repair. These prohibitions are often glossed over because many lenders do not realize that the advice they provide actually puts them in breach of these agreements. If these verification services discover that the lenders with which they contract are engaging in these practices in-house, they could very well, and most likely will, terminate the contracts and refuse to provide their services in the future.

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Because of the ever-increasing competition in the mortgage industry, it is imperative for lenders who wish to succeed to undertake initiatives to ensure that they stand head and shoulders above their competition. For the last few years we have seen a shift from a refinance to a purchase market. Additionally, the average origination costs have been steadily increasing, while the quality of leads is on the decline due, in part, to the credit difficulties widely experienced by consumers. Taking all of these factors into account, the question then becomes, “how?” “How can I differentiate myself from my competitors? “How can I increase my conversion rates?” “How can I establish a rapport with my clients to ensure repeat business and brand loyalty?”

One solution is to form strategic partnerships with third party companies that are able fill in gaps by providing services that you cannot. As discussed above, there are thousands of consumers who get turned away every day because of their credit scores. These consumers look great on paper in terms of employment status, income, and other assets, but their FICO scores render them ineligible for loans. Although lenders cannot and should not attempt to rehabilitate these consumers in-house, they should not just turn them away either. Those unqualified or underqualified consumers represent hundreds of millions of dollars in potential market share and, if lenders are able to implement a system to capture even a fraction of those consumers, they could bolster their bottom line by serving what was previously viewed as an untapped market, while establishing customer loyalty by indirectly aiding those customers that have traditionally been brushed off by the competition.

There are several not for profit entities that specialize in credit remediation and rehabilitation no cost to lenders, whatsoever. Although the non-profits were established to benefit consumers, lenders who choose to partner with these companies stand to become ancillary beneficiaries, while providing a niche service to their prospective clients. The effects of implementing this strategy are threefold in that lenders: 1) are able to insulate themselves from the potential liability that accompanies being reclassified as a credit repair organization, while ensuring that these consumers receive the assistance they require; 2) are able to maximize the value of every lead thy receive by providing this service without expending additional time or resources on conversion; and 3) are able to establish brand loyalty by offering a crucial service that competitors do not provide while simultaneously tapping a pipeline of new business.

When evaluating potential partnerships, it is imperative that lenders are able to pinpoint those organizations that are not only reputable, but that employ experienced personnel who are capable of providing the services necessary to rehabilitate the referred consumers. Not only should a chosen not for profit provide credit remediation, it should also provide coaching and education to give consumers who have traditionally experienced credit difficulties the requisite knowledge base to make sound financial decisions in the future. By affording consumers resources that teach responsible borrowing and spending habits, lenders can help ensure that when these clients return to them, ready to refinance or purchase another home in the future, they have the necessary credit profile to allow for an expeditious closing.

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Lenders should also ensure that there are mechanisms in place to monitor the progress of all consumers that they refer to their not for profit partners. This will operate to ensure that not only are the referrals making progress, but that the lenders are advised upon the completion of the rehabilitation process so that they can recapture leads in which they’ve invested considerable time and resources. The lender should also endeavor to periodically follow up with their referrals during the remediation process in order to build stronger relationships, which should lead to higher conversion rates upon completion.

Although it is getting increasingly difficult to close new loans in the mortgage industry, there are plenty of potential sources of business for savvy lenders that know how to recognize them and have systems and strategies in place to capitalize. By differentiating your organization and providing consumers with alternatives to rejection, you have the ability to maximize lead value and cut origination costs, while simultaneously building lifelong client relationships.

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Frustrated With Loan Fallout? Don’t Reject…Redirect.

Quality leads. In the wake of the federal regulations imposed after the 2008 recession, consistent access to quality leads is often regarded as the “X factor” that will make or break a loan officer’s career. Unfortunately, they usually prove to be as costly as they are difficult to come by, and no one method of lead generation has definitively outperformed the rest. Two of the most common lead generation techniques are the purchase of leads from companies that specialize in lead aggregation and direct marketing on search engines such as Google or Bing.

There are many lead generation companies that claim to be more cost effective than others or provide batches of leads at prices that often sound too good to be true. However, more often than not, those cheaper leads are priced so “competitively” because they have already been contacted ad nauseum and are simply not viable sources of potential business. Like most other things in life— you get what you pay for.

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It should also go without saying that a loan officer can’t successfully build his book of business simply by purchasing the most expensive leads available. For instance, a lender might have more success if it markets directly to consumers who are actively seeking out the products being offered by that lender. Depending on the target audience and the nature of the product, lead generation via direct marketing might prove to be more cost-effective and produce better results.

Before investing considerable resources into the various lead generation mechanisms, veteran loan officers apprise themselves of the available generation options and methodologies, their respective costs, and establish procedures and/or partnerships to maximize their return on investment.

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Purchase Leads from Third Parties

One of the more prevalent avenues through which many loan officers and mortgage companies cultivate leads is via third parties that specialize in lead aggregation. These companies have online databases which contain consumer information which may include income, age, current home value, and desired loan amount. Then, depending on the third-party website, lenders have the ability to filter potential customers based upon that information and target only those consumers that meet the lenders’ criteria.

It is common knowledge amongst those who purchase leads from third party lead aggregators that quality is often reflected in the price per lead, and the price per lead can fluctuate widely. The question is, then: What factors influence the quality of any particular lead? First and foremost, the exclusivity of the lead will often be used as the prime indicator of its quality. Exclusivity refers to how recently, and the frequency with which, the lead has been contacted by other lenders. While there is no exact metric for the duration of time elapsed since the last time a lead was contacted, a lead that is sold as exclusive should not have been contacted by another lender for several months and, in some cases, has never been contacted. These leads often provide the best opportunity for a lender to close, which makes them more valuable and, in turn, more expensive than non-exclusive leads.

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Non-exclusive leads, as the name suggests, normally mean that the consumer information has been disseminated to several other lenders who are all vying for that consumer’s business. A lower average closing percentage is reflected in the lower price per lead. Normally the more lenders that receive the lead, the cheaper that lead is.

There are several other characteristics that should also be taken into account when assessing the quality lead. For example, the depth of a lead, or the number of datapoints attributed to each consumer, determine how comprehensive a view the lender will have of prospective clients. The greater the depth, the more informed a decision the lender will be able to make when establishing its marketing strategy. Accuracy of the data is another factor that should be considered by a prospective buyer. The name of a consumer, coupled with incorrect or out of date contact information, is obviously nowhere near as valuable to the lender as those leads for which that information has been verified.

All of the aforementioned characteristics factor into the price of any particular lead or batch of leads. Depending on the source, the actual dollar amount of two seemingly identical leads can vary. One of the highest, if not the highest price per lead was reported by in 2017. Hubspot reported that the average cost per lead in the financial services industry was $272.00. However, this figure has been rebuked by many industry professionals as extremely high and most likely inflated. More conservative estimates place the cost for leads of the highest quality (exclusive, with a plethora of data points, and verified information) anywhere between $70.00 to just over $100.00 per. The price for leads that are semi-exclusive, lack as much depth, and/or lack any of the other important characteristics of the highest quality leads usually decreases proportionately to their information disparity.

Search Engine Marketing

Search engine marketing (SEM) is another method by which many cyber savvy lenders have begun to generate leads. The basic premise of SEM is to advertise directly to those consumers who are searching on Google, Bing, or any other popular search engine, for precisely the products being offered by the lender. For instance, if a lender is looking to target consumers who are in the market for a new home or looking to refinance their current home, that lender can utilize AdWords on Google or BingAds on Bing to ensure that their website and ad copy is displayed at the top of the search results when those consumers’ search terms contain certain keywords chosen by that lender such as “mortgage” or “refinance”. This method of marketing allows the lenders to track certain metrics, such as how many people are clicking on their advertisements and cross-reference the number of clicks with the actual number of applications they receive.

Search engine marketing is a popular tool for those companies who wish to generate fresh leads in-house using their own customized criteria, and who have the human bandwidth to measure and track results. This method, however, can prove to be a double-edged sword. Although the advertiser is only responsible for paying fees in the event that a potential lead clicks their link, if the search parameters are too broad, or the potential lead is looking for something unrelated (such as a college student writing an economics paper about refinancing), all of those excess clicks could prove to be very costly without yielding desired results. A lender using AdWords can expect to pay upwards of $124.00 per lead, which is on the high end of the lead generation spectrum when compared to leads purchased from third party aggregators. In this instance, however, lenders have the opportunity to cut out the middle man and market to consumers, directly. If done right, the lender can target specific consumers with pinpoint accuracy, eliminating wasteful spending. But if done incorrectly, it could prove to be a costly exercise in futility.

Maximize Lead Value

The aforementioned methodologies are meant to serve as two examples of how many lenders choose to generate quality leads and connect with promising prospects. Both have the potential to generate new loan opportunity but, if not properly researched and executed, both have the potential to devolve into expensive albatrosses around the necks of loan officers. Regardless of the outcome, lead generation, although necessary, can, and often will, prove to be a costly endeavor. For this reason, it is imperative to implement strategies to ensure that lenders will wring out all the value they can from the leads they purchase.

In the mortgage industry, a subpar credit score is one of the biggest hurdles to successful conversion of leads. All too often, leads who look great on paper in terms of employment status, income, and other assets, have a disqualifying FICO score. In fact, more than one-third of all Americans have a FICO score of 620 or below. Unfortunately, this means that lenders could wind up shelling out serious cash for leads that would otherwise be considered the highest quality, only to discover that those consumers fall outside their products’ parameters.

Because this problem has become so commonplace, many lenders have begun to partner with organizations that specialize in rehabilitating and recapturing those leads. Why let thousands of dollars’ worth leads, and millions of dollars’ worth of potential business, fall by the wayside because of credit scores? Well, now you don’t have to. Lenders have begun to solve this problem by referring those otherwise qualified consumers to non-profits that specialize in credit remediation and rehabilitation. Although the non-profits were established to benefit consumers, lenders have become an indirect beneficiary. Now they are able to recapture those leads in which they’ve invested so heavily, thus maximizing the return on their investments in the form of millions of dollars in new loan closings.

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