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It seems that just yesterday, interest rates appeared magically trapped between low and lowest. Everyone was clamoring to refinance, and it was hard not to succeed. However, 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 tends to drift toward real estate these days, the talk tends to include the word “bubble”. As the competition gets tough in the same shrinking pool of customers we need to stand out from the rest; create loyalty and have customers recommend family and friends. 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. 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 Transaction 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-loans and insurance payments. 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 simulators can help improving closing rates by offering a path to reach a desired score and close a loan that could have been lost. For example; what if a customer transferred credit card balances to a home-equity line? What if a customer closed a retail-credit-card account? What is the best way to help a customer gain 45 more points to get a desired rate or approval? A simulation tool might provide the following answer: Pay $4,000 to your XYZ bank credit card, pay $200 to your car-payment to change its status from delinquent to current, make a number of other moves and –barring other changes- likely to improve the credit score by the desired amount. This tool can even prioritize which account should be paid off first to achieve the greatest effect. Credit-simulation
tools only are intended to educate – not to predict every
situation for every consumer. They can, however, show how purchasing
and financial decisions can affect overall credit health. With an
all-in-one simulator solution, we can quickly turn a tough moment
into an educational event. It’s a technology whose time has
come. |
