A new tool provides a way for lenders and brokers to teach consumers how to reach their magic credit scores.
Posted Jun 13, 2005
Experian-Scorex, an Experian company, today revealed a new tool meant to enhance the relationships lenders and brokers have with their customers. Powered by the ScorexPlus score, ScoreRight provides a side-by-side comparison of an applicant's credit information from all three credit reporting agencies, enabling customers to understand how specific purchasing and financial decisions can effect their overall credit health. "It enables the lenders to make better lending decisions, because customers are more educated, [so] it's a customer-centric decision," says Matt Schwab, director of product development for Experian-Scorex. "Whoever's face to face with the consumer has an opportunity to educate them and build a deeper relationship."
Today the process for checking discrepancies in reports by Equifax, Experian, and
TransUnion is manual. "They try to eyeball the differences and try to
quantify the impact of those differences through rules of thumb and through intuition and experience," he says. "It's always general and it's not using the customer's own data." ScoreRight uses the customer's own data to freeze a point in time and modify the data to show how his credit score would change if a particular payment hadn't been missed or a balance had been transferred. "The score can be simulated to be more of a true representation of their credit worthiness," Schwab says. Because the system is automated, lenders also can help customer prioritize dispute resolution.
ScoreRight provides customers with immediate gratification, says Lars Skari, vice president and client executive for Inforte's financial services practice area. "In the past a borrower had to rely on historical knowledge of how to apply for a loan. Now you can sit down and know exactly where to make changes to get to that magical score that allows you to apply. It's a pretty intriguing offering," Skari says. "The three credit reporting agencies have struggled to find innovative ways to go beyond credit reporting and this is a way for them to get into credit consulting."
Mortgage brokers who want to go beyond the one-time sell can see this as an opportunity to view their jobs differently, according to Skari. There are different segments of brokers; some are very transactional, and they will not be able to do much with this tool, he says. Others looking for ongoing relationships with borrowers and product providers are the ones who can benefit from ScoreRight. Skari says more than 70 percent of lending takes place to brokers, so there's no allegiance to any one lender.
"Brokers typically don't have a lot of products to sell you [other than] what they have in the draw. They have little ability to cross- and upsell," Skari says. "This allows them to have a bit of a different conversation with the borrower. They'll use this as a building block to build long-term relationships with their customers." Because such a long time lag exists between a customer's first interaction with a broker and the time he may want additional services, providing extra help for that customer could greatly increase customer retention rates. "Many mortgage brokers are looking for opportunities to increase their relevancy."
Schwab agrees. "They're looking for repeat business," he says. "Right now, there's a gap in retention of customers. [ScoreRight] creates that loyalty with customers. They're more likely to come back to you, not rate shop."
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