New credit-scoring tools help brokers educate their customers and close more loans

Matt Schwab, vice president of product development, Experian-Scorex

As published in Scotsman Guide's Residential Edition, November 2005.

It seems that just yesterday, interest rates appeared magically trapped somewhere between low and lowest. Everyone was clamoring to refinance, and it was hard not to succeed.

Those glory days have slipped by. There's no cause for alarm, but times are appreciably tougher. We're in an environment of declining mortgage applications and a diminishing appetite for refinancing as interest rates edge upward. And the future has become more ominous. When cocktail-hour chatter drifts toward real estate these days, the talk tends to include the word bubble.

All this means one thing for mortgage brokers: stiff competition for the same shrinking pool of customers. It's a time to stand out and demonstrate you're just a bit better. How do you create loyalty and make customers return to refinance or make them recommend you to friends and family?

One way to stand out is to take advantage of new tools that decipher credit scores and offer concrete guidance on how they may be improved. Such tools can help you leapfrog from faceless service-provider to trusted financial partner -- someone who can offer a sophisticated educational environment for the arcane yet vitally important world of credit-scoring.

Simulation tools offer guidance

The time is right for these tools because credit scores have gone from something akin to a state secret to a talked-about measure of financial health. Heightened awareness of identity theft, Fair and Accurate Credit Transactions Act (FACTA) mandates for consumer access to credit reports and the real estate boom all have made consumers conscious of credit scores and how they affect mortgage, car-loan and insurance payments. Until now, though, no one outside of the major credit-score providers has had access to a nuts-and-bolts understanding of how scores are calculated or what might contribute to a high or low score.

Credit-score simulators provide a real-world view of the likely impact of specific credit-related actions. These actions can include applying for credit, refinancing, opening accounts, missing payments, consolidating debt and transferring balances.

At their best, the simulators can help improve closing rates by offering a path to reach a desired score and close a loan that could have been lost. At a minimum, they provide a customer-friendly approach to continue to reap rewards with sustained loyalty.

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