Every time you visit a website, you leave behind a trail of information, including seemingly innocuous data, like whether you use an Android or Apple device. And while that might feel like a mere personal preference, it turns out that lenders can use that type of passive signal to help predict whether you'll default. In fact, new research suggests that those signals can predict consumer behavior as accurately as traditional credit scores. That could disrupt the traditional credit bureau industry that's dominated since the 1980s--and have serious ramifications for privacy. In a new working paper from The National Bureau of Economic Research, a team of researchers analyzed over 270,000 purchases from October 2015 to December 2016 on a German e-commerce website that allows customers to buy furniture and pay for it later.
A conceptual image of a businessman offering a Bitcoin to purchase large single family home. It is a seller's market these days for homes across the top U.S. metro areas. Home prices have been rising - up 8% from 2017 - and homes are shifting fast as inventory and days on the market are down according to recent data by 8% and 7%, respectively. That said, home ownership for many remains a distant pipedream. Consequently all this is putting pressure on prospective homebuyers to settle deals quickly before opportunities to purchase dry up.
Foothill Ranch lender LoanDepot is less than a decade old, but it's quickly become one of the nation's biggest mortgage firms -- and it's still growing. It's one of a handful of alternative lenders, led by market leader QuickenLoans, that have picked up a big share of the mortgage market as banks have pulled back. Last year, LoanDepot issued 29 billion in loans, more than double the volume it originated in 2014, and also ramped up profits. It made 58 million in the first half of last year after making 15 million in all of 2014. Anthony Hsieh, the firm's founder and chief executive, hopes to keep that growth going, in part by allowing borrowers to get mortgages through a completely online process, something he has been striving for since the late 1990s.
Dear Liz: I've been using a free credit site to learn more about credit reports and credit scores. Recently I looked around and found reviews about how "horribly inaccurate" these free scores are. Where can I go to find my real FICO credit scores? I need the ones that matter, the ones that lenders use. Answer: Some free scores aren't used by any lenders.
Internal lending processes must be transformed to eliminate friction and unneeded steps, with advanced analytics supporting proactive loan decisions. The biggest opportunity in the marketplace is the ability to continuously evaluate a customer's credit worthiness and need based on artificial intelligence (AI), including a pre-approval loan amount on the front screen of the online and mobile banking app and in alerts. The transformation must look at all current processes, refining what was done to better accommodate a digital consumer, using data, advanced analytics and artificial intelligence to eliminate steps and improve the process. The future of digital lending will reduce the friction associated with the borrowing process, eliminating paper and moving all of the steps of the customer journey to an online and mobile capability.