All posts by Kerry Rivera
His car, more than 10 years old and not worth salvaging, was in the shop again. Time to invest in something new – or at least “new-ish.” He headed to a local dealership, selected a practical model and applied for financing. “We can’t give you a loan,” said the manager. “Your income is not high enough, but perhaps if you bring in a co-signer ...” Denied. Her college degree hung on the wall of her childhood bedroom. In the months since she celebrated graduation with family and friends, she landed a job, but not one providing enough income to cover rent, a car payment and her hefty student loan payments. “I didn’t realize my payments would be so high,” said the woman. “I don’t know how I’ll ever climb out from under this debt and start my life.” Stalled. His attempt at applying for a bankcard, much needed to begin the journey of establishing credit in the country, was met with failure. “We can’t find any credit history on you,” says the lender. “Try again in the future.” Invisible. These stories are all too common in America. A lack of financial education, coupled with a few poor choices, can derail an individual’s financial trajectory. More light has certainly been shone on the topic of financial education and the importance of making smart credit decisions from a young age, but there is no nationwide financial education program offered in schools, and many parents feel ill-equipped to handle the task. Consider a few of these numbers: 71 percent of college grads recently surveyed by Experian said they did not learn about credit and debt management in college, giving their schools an average grade of “C” when it comes to preparing them to manage credit and debt after college The latest \"State of Credit\" revealed the average debt per consumer is $29,093 39 percent of newlyweds say credit scores is a source of stress in their marriage Money management is tough, and we expect people to just figure it out. But clearly, that’s not working. So we need to think about the world of credit differently. As Experian says, we need to treat it as a skill. We need to practice and learn and adjust. As you get better at credit, it opens doors, creates opportunities, and enables people to live the lives they wish to live. Suddenly, you can get the car loan, move out, have access to credit cards, and manage it all responsibly. In other words, you claim financial health. On the other hand, if you don’t work at this skill, a lack of financial health ensues. Unruly amounts of debt, irregular income and sporadic savings create stress, resentment and pain. Increasingly, more financial institutions are boosting efforts to educate about credit. Schools are exploring curriculum to talk finances and inject real-life money management scenarios into everyday lessons. Millennials are seeking transparency around credit transactions. The more financially healthy consumers we have in this country, building credit skills, means overall economies will grow. So yes, financial health matters. It matters to individuals, to lending institutions, to retailers and to communities big and small. Building those credit skills is essential. Your health depends on it.
What you give, you get. At least that is what popular philosophers claim. And if you think about it, this statement is also applicable to the world of data accuracy. As organizations of all sizes increasingly rely on data to interact with customers and create insights to drive strategy, it’s no secret bad data can quickly lead a company or financial institution down the wrong path, even landing them into regulatory troubles. A recent Experian Data Quality study found: Seventy-five percent of organizations believe inaccurate data is undermining their ability to provide an excellent customer experience. Sixty-five percent of organizations wait until there are specific issues with their data before they address and fix them. Fifty-six percent of organizations believe mistakes can be attributed to human error. For years, organizations have wanted good data simply for operational efficiencies and cost savings, but now a shift has taken place where businesses are using data for nearly every aspect of their organization. The majority of sales decisions are expected to be driven by customer data by 2020, with companies determined to turn data into actionable insight to find new customers, increase customer retention, better understand their needs, and increase the value of each customer. Additionally, the Fair Credit Reporting Act (FCRA) requires those contributing data to provide accurate and complete information to the credit reporting agencies. If they fail to meet accuracy obligations when reporting negative account histories to credit reporting companies, the result could be bureau action and fines. Organizations still deal with a high degree of inaccurate data because there are a number of challenges to maintaining it. Some of them are external forces, but many are internal challenges – most notably a reliance on reactive data management strategies. The biggest problem organizations face around data management today actually comes from within. Businesses get in their own way by refusing to create a culture around data and not prioritizing the proper funding and staffing for data management. Many businesses know they need to improve their data quality, but often have a hard time defining why an investment is needed in the current structure. Solutions exist to get in front of data accuracy challenges. DataArc 360 Powered by Experian Pandora, for example, is designed to check the consumer credit information provided by data furnishers prior to submission to credit bureaus. This allows data suppliers to take more of a proactive approach to ensuring the accuracy of information, that may result in fewer credit disputes and a more positive interaction between consumers and their credit. Creating a clear governance plan, and centralizing data management policies and policies can also clean up internal challenges and improve accuracy standards. The importance of data cannot be neglected, but again, the data has to be clean for it to matter. What you give is what you’ll get.
More home buyers and sellers tend to enter the market in the warmer months, making spring and summer a busy season for mortgage brokers and lenders seeking to close deals and work through the mounds of paperwork associated with a home purchase. In April, the number of existing homes sold shot up 4.9 percent year-over-year, to 471,000 purchases across the United States, according to a recent report from the National Association of Realtors®. And sales were up 11.9 percent in April from March. With the belief that mortgage rates will finally start to climb in the coming months, fence-sitters will likely make a move this summer in order to capitalize on attractive rates, creating a healthy home-buying season. On average, it takes 45 days to close a home loan, and anyone going through that process will admit the process can cause stress, anxiety and uncertainty. In fact, a recent study ranked buying a home as the No. 1 most stressful experiences in modern life with 69 percent calling it “stressful.” There are so many tollgates along the journey. Will the consumer qualify for a mortgage? Will the home appraise at the right price? Does the home pass inspection? Are there contingencies that can suddenly halt the sale? Will the seller or buyer get cold feet and send weeks of work down the drain? Of course there are many factors people can’t control as they seek to land their next home, but there are ways both the consumer and lender can work together to smooth out the process and endure the average 45-day closing period. Getting pre-approved for a home loan is obviously the ideal, with consumers understanding their credit score, existing financial obligations and the type of loan they can qualify for, as well as money required at closing. Increasingly, borrowers know the impact credit can have on their home-buying experience. A 2016 Experian study revealed: 93 percent of consumers reported “one’s credit score is important in purchasing a home” 48 percent stated “they are working to improve their credit to qualify for a better home rate” 34 percent of future first-time buyers say “their credit might hurt their ability to purchase a home” In this competitive market, low fees and interest rates drive consumers’ business. However, credit circumstances such as high debt-to-income ratios, too many open trades, or high balances may inhibit lenders or mortgage brokers from offering favorable terms, or even approving a loan altogether. In these scenarios, consumers may qualify for better loan terms simply by paying down debt. Lenders or brokers can assist their customer in rapidly refreshing, re-scoring, or correcting information on their credit report in one to two business days. This step can obviously help consumers, but also benefit lenders by retaining credit applicants before they pursue competitive offerings. Occasionally errors may pop up on a consumer’s credit report – an outdated trade line or inaccuracy – which can also impact the home-buying process. Consumers have the ability to file a dispute with the credit bureaus or their lender directly, and those disputes must be addressed within 30 days. However, if a loan process is already underway, mortgage brokers and lenders can help expedite the process by using a product like Experian’s Express Request™ to facilitate dispute resolution in 48 hours. Quickly addressing an inaccuracy benefits the home buyer, but also the lender who is likely working to close a number of loans during the busy spring and summer months. Without a doubt, the documentation process surrounding a home purchase is intense, but if all parties come to the table quickly with the requested items and verification, the process can be smoother. And then the stress can turn to scheduling moving vans and packing …
It’s impossible to capture all of the insights and learnings of 36 breakout sessions and several keynote addresses in one post, but let’s summarize a few of the highlights from the first day of Vision 2016. 1. Who better to speak about the state of our country, specifically some of the threats we are facing than Leon Panetta, former Secretary of Defense and Director of the CIA. While we are at a critical crossroads in the United States, there is room for optimism and his hope that we can be an America in Renaissance. 2. Alex Lintner, Experian President of Consumer Information Services, conveyed how the consumer world has evolved, in large part due to technology: 67 percent of consumers made purchases across multiple channels in the last six months. More than 88M U.S. consumers use their smartphone to do some form of banking. 68 percent of Millennials believe within five years the way we access money will be totally different. 3. Peter Renton of Lend Academy spoke on the future of Online Marketplace Lending, revealing: Banks are recognizing that this industry provides them with a great opportunity and many are partnering with Online Marketplace Lenders to enter the space. Millennials are not the largest consumers in this space today, but they will be in the future. Sustained growth will be key for this industry. The largest platforms have everything they need in place to endure – even through an economic downturn.In other words, Online Marketplace Lenders are here to stay. 4. Tom King, Experian’s Chief Information Security Officer, addressed the crowds on how the world of information security is growing increasingly complex. There are 1.9 million records compromised every day, and sadly that number is expected to rise. What can businesses do? “We need to make it easier to make the bad guys go somewhere else,” says King. 5. Look at how the housing market has changed from just a few years ago: Inventory continues to be extraordinarily lean. Why? New home building continues to run at recession levels. And, 8.5 percent of homeowners are still underwater on their mortgage, preventing them from placing it on the market. In the world of single-family home originations, 2016 projections show that there will be more purchases, less refinancing and less volume. We may see further growth in HELOC’s. With a dwindling number of mortgages benefiting from refinancing, and with rising interest rates, a HELOC may potentially be the cheapest and easiest way to tap equity. 6. As organizations balance business needs with increasing fraud threats, the important thing to remember is that the customer experience will trump everything else. Top fraud threats in 2015 included: Card Not Present (CNP) First Party Fraud/Synthetic ID Application Fraud Mobile Payment/Deposit Fraud Cross-Channel FraudSo what do the experts believe is essential to fraud prevention in the future? Big Data with smart analytics. 7. The need for Identity Relationship Management can be seen by the dichotomy of “99 percent of companies think having a clear picture of their customers is important for their business; yet only 24 percent actually think they achieve this ideal.” Connecting identities throughout the customer lifecycle is critical to bridging this gap. 8. New technologies continue to bring new challenges to fraud prevention. We’ve seen that post-EMV fraud is moving “upstream” as fraudsters: Apply for new credit cards using stolen ID’s. Provision stolen cards into mobile wallet. Gain access to accounts to make purchases.Then, fraudsters are open to use these new cards everywhere. 9. Several speakers addressed the ever-changing regulatory environment. The Telephone Consumer Protection Act (TCPA) litigation is up 30 percent since the last year. Regulators are increasingly taking notice of Online Marketplace Lenders. It’s critical to consider regulatory requirements when building risk models and implementing business policies. 10. Hispanics and Millennials are a force to be reckoned with, so pay attention: Millennials will be 81 million strong by 2036, and Hispanics are projected to be 133 million strong by 2050. Significant factors for home purchase likelihood for both groups include VantageScore, age, student debt, credit card debt, auto loans, income, marital status and housing prices. More great insights from Vision coming your way tomorrow!
It’s one of our favorite times of year. Yes, spring is in the air, and we’re delighted to spend a few days away from the office in picturesque Scottsdale, Arizona. But what really has us excited is the opportunity to connect with a diverse network of industry leaders from across the country at our 35th annual Vision Conference. We have a full agenda, featuring sessions on advanced data analytics, market trends, fraud and identity, regulatory hot topics and more. And our theme for this year is geared toward giving participants the tools and insights they need to take control of their respective businesses to grow new markets, increase existing customer bases, reduce fraud and increase profits. In addition to 70-plus breakout session, guests will be treated to several keynote addresses: Leon Panetta, former U.S. Secretary of defense and former Director of the CIA James W. Paulsen, Chief Investment Strategist, Wells Capital Management Jay Leno, Television Host, Author and Comedian Listen to Experian North America CEO Craig Boundy’s welcome message, and start your Vision three-day event with the goal of meeting and engaging with as many old and new contacts as possible. For individuals not attending this year’s Vision, stay tuned for learnings and insights that will be shared in the coming weeks. Attendees and non-attendees alike can also follow updates on Twitter and via #vision2016.
Four Experian employees reflect on financial lessons and challenges learned during their time served in the military. Pedro Martinez, based at Camp Lejeune in North Carolina, was earning a monthly salary of just $680 as a Private First Class for the Marine Corps. in 1988. Winter was nearing, and since he was living off base, he needed a heater. “I was able to purchase one with ‘easy credit’ for $15 per month, for 18 months,” said Martinez, now living in Costa Rica. “I ended up paying a lot more than driving to Kmart and getting one there if I had the money. But for the purchase I was able to make at the time, I had to finance it, and I remember the interest rate was almost 40 percent.” Fast forward decades later, and Martinez recalls those same “easy credits” and payday loans surround local bases. Advance paycheck services offering rates of 30 percent and beyond for brief, 15-day cycles abound. While military base consumer advisors can encourage personnel to steer clear, more formal protections have been lacking. Until now. “The Military Lending Act is definitely a great measure to assure a fair consumer treatment, regulate high-interest rates, and safeguard families from going bankrupt,” said Martinez. No one can tell the stories of military life better than those who have lived it. They understand the training, sacrifices, day-to-day grind as well as the experiences of managing life on base and far from home. Financial education is lacking among all consumer groups in the country, and it is easy for a few credit mishaps to take individuals to a place where they soon find themselves struggling to get out of debt and obtain affordable credit. “I witnessed countless friends in the military finance furniture, receive cash advances and take out loans on their cars, which ultimately hurt them financially,” said Marshall Abercrombie, who served five years as a Navy Corpsman with the Marines. “Unfortunately, there are more title loans, cash advance and furniture leasing companies found within military towns compared to legitimate financial institutions. So, when you combine word-of-mouth, inexperience and easy access you end up with necessary legislature like the Military Lending Act.” Abercrombie, who currently resides in the southeast, claims his first “solo” experience with a financial institution saved him from falling down a bad path. “I can remember gripping my diploma thinking ‘now what am I going to do with all this money I’m about to start making?’” said Abercrombie. “Fortunate for me I was immediately greeted by a very eager representative of Armed Forces Bank. Despite being only 19 years old, looking back it’s apparent how much opportunity someone like me represented to a bank given I now had a government job that required I set up auto-deposit for future paychecks.” Especially for those military members sent overseas, opportunities and challenges can be unique. Michael Kilander, now a Southern California resident, was deployed overseas in Germany in the early 90s with his wife and ran into trouble with a large U.S. bank. “We had a credit card that we fell a month behind in paying,” says Kilander. “We had the money each time but did not receive the statement/ bill until a week after the due date. The military mail system took a great deal of time, particularly if you lived off base in the local Germany economy, as we did. We asked if the bank could mail the bill a little earlier, but they refused and were uninterested in the challenges of the APO system. Consequently we had to keep track of the amount spend on the card and estimate the likely charges and pay before we received the bill. We switched cards a few months later.” Raymond Reed, who enlisted with the Navy out of high school, was luckily advised by his parents to join a military credit union. “I did not realize I needed credit, and assumed credit was only offered to those with savings,” said Reed. “During my Navy tour, I joined a military credit union and since I did not have standard expenses, other than car insurance, which was covered by my paychecks. At the end of my tour, I saved and paid cash for my motorcycle, as I was accustomed to since I had a nice savings established.” The stories of stresses and opportunities surrounding military and credit are diverse and widespread, but the positive news is updated regulations will add increased protections. Learn more about the Servicemembers Civil Relief Act and now enhanced Military Lending Act to understand the varying protections, as well as discover how financial institutions can comply and best support military credit consumers and their families.
Television had its Twilight Zone, the Emmy-winning anthology series featuring tales rich in fantasy, morality and irony. Today\'s economy has its own Twilight Zone. It lies between the legitimate economy with its weekly paychecks, W2 forms and 401(K) plans, and the underground economy with its unreported, all-cash transactions. Call them \"The Unbanked.\" Call them \"The Credit Invisibles.\" Whatever label you choose, these men and women -- who number in the millions - want access to credit, but can’t be easily accessed with traditional credit models, and they lack a smooth on-ramp to grow in the credit universe. How a Worker Becomes \"Credit Invisible\" America\'s \"credit invisibles\" tend to be minimum- or low-wage workers. They exist in virtually every industry, although they tend to be concentrated in agriculture, food service, construction and manufacturing. Some work full-time for a single employer, while others work part-time or on a gig-by-gig basis. The FDIC estimates some 10 million Americans currently fit the definition of unbanked, while an additional 28.4 million are underbanked. Instead of traditional banks, this population tends to use the services of private check-cashing services and payday lenders for their financial services, which is not always advantageous for the consumer with these services’ sizeable expenses and transaction fees. The Payroll Card Alternative Recognizing the perils inherent in the current system, a number of companies have developed solutions to help those individuals who cannot and will not establish traditional checking and savings accounts. SOLE® Financial, a financial services company headquartered in Portland, Ore, offers the SOLE Visa® Payroll Card, allowing employees to enjoy the benefits associated with direct deposit checking accounts without the costs and restrictions traditional banks often impose. \"From a payroll standpoint, paycards function just like bank accounts,” explained Taylor Ellsworth, content marketing manager for SOLE Financial. “The transfer happens on the exact same timeline as the paychecks that employers deposit to traditional bank accounts.” Additionally, any bill from a vendor that accepts electronic payments - either online or with a card number over the phone - can accept payments from the SOLE paycard. \"For bills like rent, which sometimes can only be paid with a check or money order, cardholders can log in and use the bill pay option for $1 per bill to have a check issued to their landlord -- or any other recipient -- from their account,” said Ellsworth. Helping Credit Invisibles Build Personal Credit Files Another way companies are helping credit invisibles become visible is by considering non-retail payments, such as payments to utility companies, as part of a personal payment history. Traditionally payments to gas, electric, telephone, cable and other household service providers are generally not being reported unless the consumer is severely delinquent and thus on-time payment history is not included in credit scores. Experian recently investigated how including payments to energy utilities could affect men and women with \"thin-file\" credit portfolios. The subprime and nonprime consumers in the study received the greatest positive score impact, with 95 percent of subprime consumers and 75 percent of nonprime consumers experiencing a positive score change. A resounding 82 percent of subprime consumers in the study received a positive score impact of 11 points or more. The average VantageScore 3.0 score change for all participants was an increase of 28 points. Experian concluded, \"positive energy-utility reporting presents an opportunity for energy companies to play a key role in helping their consumers build credit history. The ability for many of these consumers to become credit-scoreable, build a more robust credit file and potentially migrate to a better risk segment simply by paying their energy bills on time each month is powerful and represents an opportunity for positive change that should be not overlooked.\" Conclusion With income inequality growing, there is an increasing pressure to find ways to improve the prospects of the tens of millions of Americans who live on the farthest edges of the American economy. New technologies and ways of looking at credit can offer the unbanked and the under-banked ways to improve their economic situation and move closer to the mainstream. By bringing these millions into the light, those who issue and evaluate credit will create millions of new customers who can, in turn, add new energy to the American economy.
With Military Appreciation Month celebrated in May, what better time for financial institutions to refresh their best practices in protecting and serving military credit consumers. Over the course of the next several weeks, there will certainly be a number of appropriate ceremonies and events to recognize the tremendous service of military members and their respective families, but these individuals should be respected and honored year-round with the sacrifices they make for our country. To help, the Department of Defense (DOD), Congress and the Consumer Financial Protection Bureau (CFPB) have worked to introduce regulations aimed at protecting the military credit consumer in the financial services universe. The Servicemembers Civil Relief Act (SCRA) was signed into law in 2003, replacing the original Soldiers and Sailors Civil Relief Act, and provides caps on interest rates, stays of certain legal proceedings, protection from eviction and termination of leases without repercussions. It has evolved through the years with enhancements, and largely protects active-duty service members, including National Guard and reserve members who have been activated by the federal government. The Military Lending Act (MLA), on the other hand, has received the most headlines over the past year. In July 2015, the DOD issued a Final Rule, expanding the scope and requiring compliance by October 2016, with rules for credit cards extended until October 2017. It limits the APR to 36 percent on covered products, requires military-specific disclosures and prohibits creditors from requiring a service member to submit to arbitration in the event of a dispute. With the updates recently introduced, these protections are now extended to active duty spouses and dependents. Creditors must also verify active duty status and dependents at origination. Beyond these very specific laws to follow, and the solutions to make that process simplified, lenders can do so much more serve this audience. Provide education on your website about military-specific benefits and rebates. Don’t bury them – call them out so this audience can clearly identify opportunities to partner with you, whether that come in the form of waived bank fees, special credit cards or discounted offers on vehicles. If you serve a large military population, create materials and web content to communicate how to handle deployment situations. The SCRA specifically enables these individuals to institute an interest-rate cap on pre-service debt, plus the ability to terminate leases. Deployment is a stressful time, so make it easier with clear actions your consumers can take. Encourage active duty military members to add an Active Duty Alert to their credit report to help protect themselves from fraud and identity theft. Leverage tools to scrub your portfolio lists to reveal military indicators. Less than 1 percent of our nation\'s population serves in uniform, but there is definitely a lens being shined on how companies serve and connect with military members and their families. Now is the perfect time to assess your practices and compliance track record with military credit consumers to see how you rank on the mandatory regulations, as well as your general customer service and communications. Because really, our military deserves support and recognition not just in May, but always.
The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. In fact, a recent Experian study revealed consumer debt is decreasing in every major consumer lending category with the exception of student loans. Student loans have increased by 84 percent since the recession (from 2008 to 2014) and surpassed home equity loans, home-equity lines of credit (HELOC), credit card debt and automotive debt. While the student loan issue has been looming for years, the magnitude is now taking center stage with each 2016 presidential candidate weighing in on solutions. In an effort to provide deeper insights into the student debt universe, Experian’s Kelley Motley and Holly Deason will share a new analysis at Vision 2016 in a session titled, Get educated – a study in the student lending marketplace. They will be joined by Gordon Cameron, executive vice president of PNC. Among the findings they will share include a snapshot of consumers with student loans from three time periods – Pre-recession (December 2007), Recession (December 2009) and Post-Recession/Current (December 2015). At each of these time periods, they will reveal trends around outstanding debt, delinquencies, originations, and also a compare how consumers with student loans rank when it comes to Vantage Score distribution. Finally, their data will explore opportunities for consolidation, showing segments that might be best suited for receiving offers from financial institutions based on Vantage Score, debt and total number of trades. Click here to learn more about Vision 2016 and the session on student loans.
April is Financial Literacy Month, a special window of time dedicated to educating Americans about money management. But as stats and studies reveal, it might be wise to spend every month shining some attention on financial education, an area so many struggle to understand. Obviously no one wants to talk money day in and day out. It can be complicated, make us feel bad and serve as a source of stress. But as the saying goes, information is power. Over the years, Experian has worked to understand the country’s state of credit. Which states sport higher scores? Which states struggle? How do people pay down their debts? And what are the triggers for when accounts trail into collections? In the consumer space especially, we’ve surveyed individuals about how they feel about their own credit as it pertains to a number of different variables and life stages. Home Buying: 34% of future home buyers say their credit might hurt their ability to purchase a home 45% of future home buyers delayed a purchase to improve their credit to get better interest rates Holiday Shopping: 10% of consumers and 18% of millennials say holiday shopping has negatively affected their credit score Newlywed Life: 60% believe it is important for their future spouse to have a good credit score 39% say their spouse’s credit score or their credit score has been a source of stress in their marriage 35% of newlyweds believe they are “very knowledgeable” regarding credit scores and reports And let’s not forget Millennials: 71% of millennials believe they are knowledgeable when it comes to credit, yet: millennials overestimate their credit score by 29 points 32% do not know their credit score 61% check their credit report less than every 3 months 57% feel like the odds are stacked against them when it comes to finances and 59% feel like they are “going it alone” when it comes to finances The message is clear. Finances are simply a part of life, but can obviously serve as a source of stress. Establishing and growing credit often starts at a young age, and runs through every major life event. Historically, high school is where the bulk of financial literacy programs have targeted their efforts. But even older adults, who have arguably learned something about personal finances by managing their own, could stand a refresher on topics ranging from refinancing to retirement to reverse mortgages. Over the next month, Experian will touch on several timely financial education topics, including highlighting the top credit questions asked, the future of financial education in the social media space, investing in retirement, ways to teach your kids about money, and how to find a legit credit counselor. But Experian explores financial education topics weekly too, committed to providing consistent resources to both businesses and consumers via weekly tweet chats, blog posts and live discussions on periscope. There is always an opportunity to learn more about finances. Throughout the year, different issues pop up, and milestone moments mean we need to brush up on the latest ways to spend and save. It’s nice so many financial institutions make a special point to highlight financial education in April, but hopefully consumers and lenders alike continue to dedicate time to this important topic every month. Managing money is a lifelong task, so tips and insights are always welcome. Right? Check out the wealth of resources and pass it on. For a complete picture of consumer credit trends from Experian\'s database of over 230 million consumers, purchase the Experian Market Intelligence Brief.
It’s the “Battle of the Sexes” credit edition. Who sports higher scores, less debt and more on-time payments? According to Experian’s latest analysis, women take the credit title. Thank you very much. The report analyzed multiple categories including credit scores, average debt, number of open credit cards, utilization ratios, mortgage amounts and mortgage delinquencies of men and women in the United States. Results revealed: Women’s average credit score of 675 compared to men’s score of 670 Women have 3.7 percent less average debt than men Women have 23.5 percent more open credit cards Women and men have the same revolving utilization ratio of 29.9 percent Women’s average mortgage loan amount is 7.9 percent less than men’s Women have a lower incidence of late mortgage payments by 8.1 percent “There were several gaps between men and women in this study, including the five-point credit score lead that the women hold,” said Michele Raneri, Experian’s Vice President of Analytics and New Business Development. “Even with more credit cards, women have fewer overall debts and are managing to pay those debts on time.” The report also takes a look at the vehicle preferences of men and women and how those choices play into their overall credit and financial health. Below are the top-line results: Women were more likely to purchase a more functional, utilitarian vehicle, while men tended to lean toward sports cars and trucks The top three vehicle segments men purchased in 2015 were mid-size pickup trucks, large pickup trucks and standard specialty cars. In fact, they were 1.37 times more likely to purchase a mid-sized pickup truck than the general population The top three vehicle segments for women were small crossover-utility vehicles, mid-size sports-utility vehicles and compact crossover-utility vehicles. Women were 1.40 times more likely to purchase the small crossover-utility vehicle than the general population Experian conducted a similar study, comparing men and women on various credit attributes in 2013. At that time, women also scored higher than men in the credit score category - holding steady with a 675 VantageScore compared to the men’s 674 VantageScore, but the gap has widened, with the men’s score further lowering to 670. While men’s scores have dropped since 2013, the overall financial health for both sexes is strong. Most notably, the mortgage 60-plus delinquency rate has dropped significantly. In the 2013 pull, men were tracking at 5.7 percent and women were 5.3 percent. Today, those numbers have dropped to .86 percent for men and .79 percent for women. What a difference a few years has made in regards to the recovering housing market. Time will tell if the country’s state of credit will continue to trend higher, as indicated in the 2015 annual report, or if the buzz of potential recession and an election year will reverse the positive trend. As for now, the women once again claim bragging rights as it pertains to credit. Analysis methodology The analysis is based on a statistically relevant, sampling of depersonalized data of Experian’s consumer credit database from December 2015. Gender information was obtained from Experian Marketing Services.
Accuracy matters. It matters in dart throwing, math calculations, and now more than ever, in data reporting. The Consumer Financial Protection Bureau (CFPB) issued a bulletin on Feb. 3 warning banks and credit unions that if they fail to meet accuracy obligations when reporting negative account histories to credit reporting companies, the result could be bureau action. As noted in the Fair Credit Reporting Act (FCRA) section 623, data furnishers have an obligation to ensure the accuracy of the information furnished to a Credit Reporting Agency (CRA). Violation of these rules presents a variety of risks, and the regulatory agencies have enforced harsh consequences. Avoiding penalties is certainly a strong incentive for data furnishers to implement a formal compliance management system and data quality program. But there are additional benefits to ensuring accuracy – most notably keeping customers happy and loyal, and maintaining a reputable brand in the marketplace. Today’s consumers increasingly understand the impact of credit scoring and data reporting, and recognize a poor credit score can impact their lives in major ways. Credit is tied to so many milestone financial moments. Securing mortgage loans, auto loans, obtaining low-interest rate interest credit cards and securing private student loans can all be derailed with an unfavorable and inaccurate credit report. Not to mention credit reports can influence one’s eligibility for rental housing, setting premiums for auto and homeowners insurance in some states, or determining whether to hire an applicant for a job. To properly serve customers who simply expect a fair and accurate representation of their financial history, data furnishers must be able to guarantee the credibility of their reported data. Those organizations that cannot ensure accuracy put their reputation at risk and may lose a customer’s trust and business. “Consumers should not be sidelined out of the basic banking services they need because of the flaws and limitations in a murky system,” Cordray said in the bulletin. “People deserve to have more options for access to lower-risk deposit accounts that can better fit their needs.” The CFPB has handled more than 105,000 credit-reporting complaints in its short history, making credit reporting the third most-complained-about consumer issue. By far the most common types of credit-reporting issues identified by consumers is incorrect information on credit report (77 percent).* Certainly these mistakes are not made intentionally. But speak to a consumer battling an inaccuracy, especially someone in the midst of applying for credit for a specific need, and frustrations can soar quickly. All lenders are advised to maintain a full 360-degree view of data reporting, from raw data submissions to the consumer credit profile. Better data input equals fewer inaccuracies. Additionally, there are comprehensive reporting solutions available to assess the accuracy of consumer credit data. The regulatory environment will without a doubt continue to be a hot topic in the media, fueled by announcements such as these by the CFPB, so lenders should take note and identify processes to ensure complete and utter accuracy. It matters in so many ways, so it’s best to make data reporting a priority now, if it’s not already. Source: CFPB August 2015 Monthly Complaint Report
Who will take the coveted Super Bowl title in 2016? Now that we’re down to the final two teams, the commentary will heighten. Sportscasters, analysts, former athletes, co-workers ... even your local barista has an opinion. Will it be Peyton Manning\'s Denver Broncos or the rising Carolina Panthers? Millions will make predictions in the coming weeks, but a little research can go a long way in delivering meaningful insights. How have the teams been trending over the season? Are there injuries? Who is favored and what’s the spread? Which quarterback is leading in pass completions, passing yards, touchdowns, etc.? Who has been on this stage before, ready to embrace the spotlight and epic media frenzy? The world of sports is filled with stats resulting from historical data. And when you think about it, the world of credit could be treated similarly. Over the past several years, there has been much hype about “credit invisibles” and the need to “score more.” A traditional pull will likely leave many “no-file” and “thin-file” consumers out, so it’s in a lender’s best interest to leverage alternative scoring models to uncover more. But it’s also important to remember a score is just a snapshot, a mere moment in time. How did a consumer arrive to that particular score pulled on any given day? Has their score been trending up or down? Has an individual been paying off debt at a rapid pace or slipping further behind? Two individuals could have the exact same score, but likely arrived to that place differently. The backstory is good to know – in sports and in the world of credit. Trended data can be attached to balances, credit limits, minimum payment due, actual payment and date of payment. By assessing these areas on a consumer file for 24 months, more insights are delivered and lenders can take note of behavior patterns to assist with risk assessment, marketing and share-of-wallet analysis. For example, looking closer at those consumers with five trades or more, Experian trended data reveals: 27% are revolvers, carrying balances each month 27% are transactors, paying off large portions, or all of their balances 9% are rate surfers, who tend to frequently transfer balances to credit cards with 0% or low introductory rates. Now these consumers can be viewed beyond a score. Suddenly, lenders can look within or outside their portfolio to understand how consumers use credit, what to offer them, and assess overall profitability. In short, trended data provides a more detailed view of a borrower’s historical credit performance, and that richness makes for a more informed decision. Without a doubt, there is power in the score – and being able to score more – but when it comes time to place your bets, the trended data matters, adding a whole new dimension to an individual’s credit score. Place your wagers accordingly. As for who will win Super Bowl 2016? I haven’t a clue. I’m more into the commercials. And I hear Coldplay is on for the half-time show. If you’re betting, best of luck, and do your homework.
The world of online marketplace lending has grown tremendously over the past several years. Still, for as much hype as it has received, it’s important to note the sector represents only 1.1 percent of unsecured loans and 2.5 percent of small business loans in the United States. While the industry is still in its infancy, it\'s expected to grow at an annual rate of 47 percent in the U.S by 2020, according to Morgan Stanley. And as it transitions from its “start-up” phase into “adolescence,” many expect it will become a high-growth, mature and stable market, bringing great benefit to consumers of financial services. So what does the future hold for online marketplace lenders? Who better to weigh in than those in the space, going through the evolution, seeing challenges first-hand and keeping a pulse on where they need to invest in order to survive. This video features a diverse group of leaders in the online marketplace lending industry. // Peter Renton, Founder, Lend Academy Scott Sanborn, COO, Lending Club Sam Hodges, Co-founder, Funding Circle USA Andrew Smith, Partner, Covington & Burling Joseph DePaulo, CEO, College Ave. Kathryn Ebner, VP, Credibly Without stealing all of their thunder, a few key themes emerged for 2016. Online marketplace lenders will look to expand their product offerings into all credit verticals – personal loans, auto, student, small business and beyond. Expect competition to continue to heat up. Large institutional investors will increasingly back and test the space. Some players will partner with large banks. Many will explore scoring with the use of alternative data. Innovations to come in customer service and product expansion. Bottom line, alternative finance doesn’t seem so “alternative” anymore. As such, competition will heat up, and regulators will continue to keep an eye on business practices, processes and what it all means for consumers. To learn more about online marketplace lending, visit https://www.experian.com/business-services/landing/marketplace-lending.html
The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, and an average balance of $29,000. With Millennials exiting college and buried in debt, it’s no surprise they are postponing marriage, having babies, home purchases and other major life events. While the student loan issue has been looming for years, the magnitude is now taking center stage. All of the 2016 presidential contenders have an opinion, and many are starting to propose solutions – some going as far as to call for “debt-free college.” The issue has also caught the eye of the Consumer Financial Protection Bureau (CFPB). In its 2014 report, the CFPB stated one in four recent college graduates is either unemployed or underemployed. They also stated when faced with the inability to repay their debt, students lack payment options and are unclear as to how to resolve their debt. There is a bright spot. Experian reported new findings stating that among adults 18 to 34 years of age, the average credit score of those who had at least one open student loan account was 640, 20 points higher than others in their age group. So, if paid in a timely manner, student loans can help younger people establish a decent credit history before they go on to buy things like homes and cars. Still, education is key. Today, only 24 U.S. states require some form of financial literacy to be included in their high school course work, with only four states (Utah, Montana, Tennessee and Virginia) devoting a full semester to a personal finance course. Education is needed before students start diving into the student loan scene, and also after they graduate, to ensure they understand their repayment options and obligations. The CFPB is calling on all parties (universities, colleges, private lenders, advocates, policy makers and even family members) to get involved. Providing financial education, financial literacy, repayment options, deferral methods and income calculators are all needed to tackle this growing problem. The Great Recession and slow recovery brought home the importance of a college degree in today’s economy for many Americans. Bachelor’s degree recipients fared much better than their counterparts who only finished high school. The question becomes how to fund it, and make sure students who rely on loans understand the finances attached to this milestone investment. Learn more about Experian’s student debt trends and credit education in The Increasing Need for Consumer Credit Education: A Review of Student Debt.
Learn More Image
