What’s the ROI? What a Credit First lending strategy could mean for your bottom line.

*Blog was written from direct quotes and subject matter covered in the embedded interview video.

What is a Credit First lending strategy?

Well, the interesting thing about the mortgage process in general is, credit is really the only thing that you can impact in the short-term. Additionally, more than 20% of the people who fall out of the application process is due to credit. If you think about it, your income, so the debt-to-income ratio, is really hard to move. It’s pretty static.

You have two very important pieces that are hard to move. Then you have credit, and credit is the area where you can move the needle in as little as 30 days. If they need more help, we can put a custom, predictive plan in place for a longer period of time – the fact that we can impact credit is really the basis of a credit-first strategy. Because what’s the goal for lenders? The goal is to help people and close more loans.

Three out of four borrowers, I mean nationwide, all credit classes, could improve their credit score. Could make it better by up to 20 points in less than 30 days.

It’s a staggering statistic, and it’s backed by data. We are a data analytics company, after all. It’s remarkable. That statistic, and I’ve mentioned it in a few of these podcasts in different areas, is staggering. People are surprised by that. Frankly, we were a little surprised by that as well. I mean, that’s the value of really looking at the data for what it is. But yeah, that’s true. Nearly 70% of people can improve their credit score by more than 20 points in as little as 30 days, for those under a credit score of 740. So, you’re talking about a fairly big swath of the applicant pool.

How can you boost your ROI using CreditXpert?

If you look at what lenders have had to do the past couple years, you had this massive increase in terms of volume. So, what did they do? They hired people and increased their costs to support that. Now the volume is down, so you have two choices. You’re either going to cut costs or you’re going to have to drive revenue.

Lenders are trying to cut costs, but they’re not saying “no” to investing in new tools. What they’re looking for is a strong return on their investments.

Here’s how CreditXpert can help, or if you just look generally what lenders are trying to do, first of all, they want to attract more leads. They want to get more people into the pipeline. Second, you want to convert more of those leads into the application process. When you get people into the application process, you want to get them approved or close more of those loans. You want to be competitive in your rates, and ultimately you want to close more loans and drive more operating profit.

The three areas that are proven to drive ROI:

1. Grow your applicant pool
2. Improve your conversion rate
3. Reduce your credit related fallout

How do you get more people from the lead pool into the application process?

Getting more people from the lead pool into the application process is easier when using CreditXpert, because you’re able to see the applicant’s credit potential and can create a plan to achieve their target mid-score. You can keep them in the application process longer, and once they’re approved for a mortgage, you are more likely to close them. Applicants begin to trust you more, because you are spending the extra time on them to improve their credit – working with them to get the best possible loan package. That’s the perfect segway to the Credit First lending strategy.

Why CreditXpert is right, for right now. And in the future.

In a down market, this is sometimes where market share changes hands. This is where companies take a step back and really evaluate what they have to do to get better for the next run. So, the timing is actually great for us right now. And look, the most exciting thing for us as a company is our passion for our mission. We really want to help people, and the more that we can get lenders to get excited about this and to execute on this, it helps their business. That’s the money part, but it also helps … A lot of people out there need the help, and that’s the love part. We like to say, “It’s for love and money.”