CreditXpert stands apart in the industry by offering innovative solutions that emphasize credit optimization over traditional credit repair. In this executive conversation with Mike Darne, VP of Marketing, we explore how CreditXpert is delivering precise credit optimization solutions and their commitment to making homeownership more accessible and affordable.
HousingWire: CreditXpert brings value to people in a really special and interesting way via credit optimization, which is different from credit repair. Can you explain the difference between the two?
Mike Darne: This is a question that we often get from those who have never used a CreditXpert product like Wayfinder or What-if Simulator. Those who use our tools intuitively understand the differences. I think the best way to explain how credit repair differs from credit optimization is to focus on three key areas: relevant audience, timeframe, and certainty.
Let’s start with relevant audiences. By this, I mean the number of mortgage applicants who could benefit from either credit repair or credit optimization. We have found it difficult to get any solid statistics on the number of mortgage applicants who could be helped by credit repair. That said, we believe that it is most appropriate for subprime applicants who may have some significant inaccuracies on their credit record. When you look at it this way, those who could benefit from credit repair represent a small portion of those seeking a mortgage. On the other hand, credit optimization is applicable to a much larger segment of mortgage seekers. Our data shows us that more than 70% of those seeking a mortgage could improve their credit score by at least 20 points in just 30 days. This applies to those with credit scores ranging from subprime all the way through to super-prime applicants.
The next key differentiator between credit repair and credit optimization is the timeframe. This is particularly relevant in today’s market, where low inventory requires home seekers to act quickly. Credit repair tends to be a lengthy process that can stretch on for several months. This lengthy time frame is primarily driven by back-and-forth communication with creditors and bureaus. credit optimization, however, can yield meaningful changes in 30 days or less. Because credit optimization leverages powerful predictive analytics to highlight specific actions needed to reach a target score, the timeframe is mainly in the hands of the applicant. This makes credit optimization an invaluable tool for those wanting to move quickly.
The last differentiator is certainty. Credit repair companies conduct a manual review of an applicant’s credit file and look for inaccuracies that could be disputed. While this pinpoints the inaccuracies, it does not give reliable insights into what correcting those inaccuracies will do for an applicant’s credit score. Credit optimization, on the other hand, is rooted in predictability and accuracy. Because credit optimization leverages sophisticated predictive analytics to run hundreds of simulations in just seconds, applicants will know precisely what actions need to be taken to reach a target score and the likelihood of achieving the desired results. This is particularly important for originators as it allows them to recommend credit optimization and have the confidence that their applicants will reach the desired target score.
We are a company driven to make homeownership more accessible and affordable for all.
HW: What makes credit optimization such a powerful asset for both LOs and homebuyers? Is this something that everyone can benefit from, or is it more for an LO with homebuyers in a particular credit score range.
MD: As I mentioned, more than 70% of mortgage applicants could improve their score by at least 20 points in 30 days. That’s a sizable population that could benefit from credit optimization. But when you break that number down into outcomes, we see that specific segments of borrowers benefit from credit optimization in different ways. Let’s start with the lower end of the credit spectrum. We know that 53% of those who were likely initially rejected because of a low credit score could get to a point where they could qualify in just 30 days. For these borrowers, just qualifying for a mortgage could be a life-changing outcome. This means they will have the opportunity to start building wealth that may eventually be passed down to future generations.
We’re super proud of how our technology helps these borrowers. However, the impact could be equally significant when it comes to those who have already qualified for a mortgage. Our data shows that about 70% of those who qualified for a mortgage could lower their interest rate with a higher credit score. A higher credit score could result in lower premiums. for those paying private mortgage insurance Let’s take someone with an initial credit score of 640 looking to borrow $360,000 with a 90% LTV. Our predictive analytics shows the LO working with that borrower that they could improve their score by 40 points in just 30 days. That higher score will knock off 65 basis points from their interest rate, saving them $158 in principal and interest and another $131 in monthly private mortgage insurance premiums. All of this adds up to nearly $75,000 over the life of a 30-year mortgage. And in this same situation, the lender also benefits through a $1,800 lower LLPA premium.
HW: Being proactive is one of the most important factors in succeeding in the current market. How does CreditXpert help lenders and real estate professionals stay proactive right now?
MD: You are right; the lenders and real estate professionals who are proactive in competitive markets like this end up on top. We know from our research that most borrowers shop around by applying with multiple lenders in search of the best fit. For many, this is all about rate, but they also want to work with someone who will look out for their best interests and be a trusted advisor. After all, for most, purchasing a home is likely one of the most significant investments they will make in their life. Lenders who lean forward and make credit optimization part of their core offerings will likely win on both fronts. They will be able to offer the most competitive rates and loan programs and demonstrate that they are doing everything they can for their borrowers.
HW: What investments in tech and AI have proved the most beneficial and productive? What are you investing and/or focusing on right now for growth?
MD: For over a decade, we have offered Wayfinder and What-if Simulator credit optimization tools exclusively through credit report providers. Three years ago, we started working on a cloud-based offering that combined the best of those two tools to enable lenders to scale credit optimization within their operations. We launched this new cloud platform in 2023 and are upgrading lenders before sunsetting Wayfinder and What-If Simulator on October 1, 2024. This new cloud platform will allow us to develop new ways to highlight opportunities for originators, improve workflows, and simplify the process for applicants. We are also working to support the latest models and requirements set to roll out in 2025.
HW: Your company has a mission that boils down to, “helping people.” How do you see that mission playing out over the next year? What about a little further down the road? How will you be helping people in five to ten years?
MD: You’re right; we are a company driven to make homeownership more accessible and affordable for all. In fact, when we poll our employees, our mission is the number one reason they cite as the reason they joined CreditXpert. When you take that mission statement and make it applicable to our direct sphere of influence, we are focused on ensuring that EVERY mortgage applicant has the opportunity to optimize their credit score by the year 2026. With millions of applicants every year, this is an important and ambitious goal for us and the industry.
While we already have many of the industry’s largest originators using CreditXpert’s credit optimization tools today, more work must be done. Specifically, we are focused on putting the best and easiest-to-use tech in the hands of all originators. This includes refining our predictive analytics to highlight opportunities early in the process. We will also be working to drive consumer awareness of credit optimization. In a 2023 study we conducted with mortgage holders and seekers, we learned that credit optimization gave applicants a sense of empowerment, brought more transparency to the process, and reduced stress. Our team understands the opportunity they have to make homeownership more accessible and affordable for all and is excited to bring about positive change to the industry.
