ELGIN, Ill. – Lending Solutions said it has developed a new credit-decision model that more accurately projects a potential borrower’s financial condition almost a year down the road.
While it may not be the crystal ball that lenders needed in advance of the mortgage meltdown, it’s the next closet thing, according to Rex Johnson, CEO and founder of the company. "Our model takes a very deep look at a member’s total financial situation," Johnson told The Credit Union Journal, "and that allows us to fast-forward about nine months and see what the picture will be."
Called High Yield Lending Strategy, the online tool hosted by LSI is used by loan officers and works off a traditional credit score. It asks a series of 27 questions about a member’s finances – including entering the person’s credit bureau score – and then recalculates to show a new score that more accurately reflects the individual’s ability to repay now and in the future.
Some of the critical areas the new tool takes into account are: secured and unsecured debt as a percentage of gross annual income, how long individuals have been at a job and living at the same address, dollar amount on deposit at the credit union, direct deposit, and length of credit union membership.
"We believe the stronger the relationship you have with someone the greater the likelihood that when they have to choose who they can pay, they will choose you," Johnson said.
