Financial Services

$1.3 trillion. 41.1 million Americans. $31,590. These are the growing numbers associated with student loan debt in the United States: $1.3 trillion in outstanding student loans, spread across 41.1 million people, who are leaving college with an average balance of $31,590. The numbers are staggering, and for the first time student loan debt is playing a prominent role in a presidential election. For all of their differences, presidential nominees Hillary Clinton and Donald Trump seem to agree on one thing: student loan debt is a crushing burden. Both candidates have proposed solutions for student lending. Clinton’s “New College Compact” would allow borrowers to refinance their student loans at current rates available to students taking out new loans. She also wants to reduce interest rates on new student loans, and make it easier for borrowers to enroll in income-driven repayment programs that would cap monthly payments at 10 percent of discretionary income. Trump proposes giving more oversight to colleges to decide whether to grant loans to students based on their prospective major. The plan would also give private banks oversight over government-backed student loans—reversing a 2010 decision under President Obama to make the federal government the lender. Neither candidate, however, has outlined a solution for taming growing tuition costs. Tuition expenses are up 1,225 percent over the past 36 years, outpacing medical costs (634 percent rise) and the consumer price index (279 percent) over the same period, according to the Bureau of Labor Statistics. So it’s not surprising an Experian study shows the student loan rate has grown five percent in the past three years. What is surprising is the number of people and the average age of those people holding student loans. Experian found: 20 percent of people with a credit file hold a student loan that is being repaid or deferred. The average age of a consumer with a student loan is 37, with an average income of $47,200 compared to 53.8 and an average income is $44,500 for consumers without a student loan. The average age of a consumer with at least one deferred student loan is 32.7 with an average income of $32,900 compared to 38.7 and an average income of $53,200 for consumers with at least one non-deferred student loan. Candidate proposals aside, one thing is certain: student loan debt has a very real impact on the daily lives of people, many of whom have delayed buying homes, starting families, and saving for retirement. Until policymakers find a way to address bloated tuitions and student debt, it will take many longer to realize their dreams.

When financial planners and tax advisors meet with clients to review their portfolios, chances are they don't go over their credit reports often. Maybe they never do. Kiplinger’s estimates less than half of professional financial advisors take the time to review credit reports with clients. But taking this step is critical to understanding a person’s complete financial situation and creating a realistic plan. Prepare for Future Opportunities Clients may have all the credit they need at the moment, but if their credit score is mediocre or low, they might end up paying for it in the future. Just when they want to refinance a loan, buy more insurance, apply for a dream job or buy a business, they may discover their credit score is an obstacle. Check for Errors                    Credit bureaus collect billions of data points from millions of businesses each year, and it’s important to check a credit report for accuracy. If there are errors in a client’s file, he or she may be unfairly penalized. Keep in mind that nearly every company checks credit reports to determine who to do business with. Potential employers, business partners and insurance companies give credit files a look before deciding whether or not to make an offer to a person. Awareness Mistakes aren't the only factor leading to a low credit score. Too many hard inquiries, a maxed-out credit card or a number of small loans that could be paid off all cost credit points. Reviewing a credit report is a great way to help clients see the real impact their habits have on their financial life, and they could realize a significant rise in their credit score with little effort. Stand Out in the Crowd Even if a person has an exceptional credit report, a financial or tax advisor will gain credibility by reviewing their information with them. Doing so demonstrates out-of-the-box thinking and concern for a person’s financial health. Let's see a robo-advisor do this. Financial professionals can easily and securely review their clients’ credit reports online. Ready to understand your client’s complete financial situation? Try out our online solution at no cost to you. Interested in integrating with your existing financial or tax planning software? Learn more about integration options with Experian’s API.

In this new Telephone Consumer Protection Act (TCPA) era, calling your customers isn’t a thing of the past. It’s still okay to reach out to your clients by phone, whether to offer a new product or collect on an overdue bill. But strict compliance with TCPA rules is critical for any business that contacts customers by phone. Some of the very best ways you can protect yourself from TCPA exposure is to follow four steps when creating your dialing strategy: Customer consent: It’s important to maintain and update your customers’ contact preferences and consent to call them. Simply having a phone number on an application isn’t sufficient. Companies are required to have written permission, such as “I consent to calling my cell phone when there’s a problem …” Remember, permission may only be granted by the party who subscribes to the cellular service or who regularly uses that cell phone number. Landline or wireless?: Your database should also include the phone type for the telephone numbers you have for your customers. The dialing rules differ depending on the phone type, so it’s critical to know the type of phone you are calling or texting. Verify ownership: Ownership of cell phones should especially be validated to ensure the number hasn’t been reassigned and that the person who gave consent still owns the phone. One call can be made to a reassigned number with no liability, assuming you have no knowledge the number has changed. Repeating the action could lead to fines from $500 to $1,500 per infraction. Scrub Your Database: Have practices in place to remove any confirmed reassigned phone numbers from your database. This will help to improve your right-party contact rate and save you from potential TCPA headaches. No one disagrees that calling cell numbers is a risky business, but it can be done if you set the proper workflow in motion. Click here to learn more about Experian solutions that will help to reduce your TCPA compliance risk.

With the Oct. 3, 2016 compliance date upon us, many lenders continue to debate how they would like to solve for the Military Lending Act (MLA). With new enhancements, more protections have been granted to members of the military and their dependents when it comes to “consumer credit” products, specifically around the 36% cap on the MAPR. The key then becomes how to identify these individuals. At origination, how can the lender know if an individual is a member of the military, or a service member’s dependent? The answer, of course, lies in verification. Under the new Department of Defense (DOD) rule, lenders will have to check each credit applicant to confirm that they are not a service member, spouse, or the dependent of a service member.  The final rule includes a “safe harbor” from liability for lenders who verify the MLA status of a consumer through a nationwide Credit Reporting Agency (CRA) or the DOD’s own database, known as the DMDC. Obviously, lenders will want to have this “safe harbor,” so the question becomes do you opt for the direct or indirect solution? The direct solution is to have the lender access the DMDC on their own. With this option, expected turnaround time is 24 hours for batch searches. The DMDC expects the volume of searches to their servers to increase from 220 million a week to 1.9 billion a week. For some, this feels like a more manual process, but it can be done. The indirect solution involves the CRA accessing the DMDC data on the lender’s behalf. In Experian’s case, this would translate into lenders seeing the MLA indicator on the credit report at point of origination or making a call out for just the MLA indicator. The process is integrated into the credit-pull cycle, so no manual effort is required on the lender’s end. MLA status is simply flagged. The rule also permits the consumer report to be obtained from a reseller that obtains such a report from a nationwide consumer reporting agency. Required data to perform a search includes full legal name, address, social security number and date of birth. This applies to both the credit report add-on and Experian’s standalone solutions. If any of this data is missing from the inquiry, Experian is unable to perform the MLA search. Credit card lenders have until Oct. 3, 2017 to adhere to the new standards, but all other applicable lenders must act now and build out their compliance standards and solutions. Direct or indirect? That is the question. To learn more about MLA or how Experian can help, visit our dedicated-MLA site.

CNP fraud accounts for 60%-70% of card fraud in many countries & is increasing. US merchants/card issuers likely will see rise in CNP fraud w/EMV migration

Prescriptive solutions can synthesize big data, analytics, and business strategies to provide businesses an optimized workflow to reach a final decision.

For lenders to capitalize and identify the right consumers for their respective portfolios, they need insights. Trade level fields can bridge the gap.

Minimize identity fraud risk, increase customer engagement & provide a good customer experience by shifting to an ID relationship management strategy

At the end of July, the Consumer Financial Protection Bureau (CFPB) took a significant step toward reforming the regulatory framework for the debt collection and debt buying industry by announcing an outline of proposals under consideration.  The proposals will now be considered by a small business review panel before the CFPB announces a proposed rule for wider industry comment. The CFPB said its proposals will affect only third-party debt collectors pursuant to the Fair Debt Collection Practices Act (FDCPA).  However, the CFPB signaled it may consider a separate set of proposals for first-party collectors. The collections industry has long been a focus of the CFPB.  In 2012, the bureau designated larger market participants in the debt collections marketplace and placed some of these entities under supervision. In 2013, the CFPB released an Advanced Notice of Proposed Rulemaking covering collections. The focus on debt collection is fueled in part by the large number of consumer complaints it receives about the debt collection market (roughly 35% of total complaints).  Moreover, the CFPB’s proposals build upon some of the regulatory and enforcement priorities that the CFPB and Federal Trade Commission have pursued for several years around data quality, consumer communication and disclosures. Here are some of the key takeaways for third party debt collectors from the CFPB’s proposals: Address data quality: Collectors would be required to substantiate claims that a consumer owes a debt in order to begin a collection. Collectors would also be required to pass on information provided by consumers in the course of collections activity. New Validation Notice and Statement of Rights: The CFPB’s draft outline would update the information provided to consumers through the FDCPA validation notice, as well as require disclosure of a consumer statement of rights. Changes to frequency of communications:  Debt collectors would be limited to six emails, phone calls or mailings per week, including unanswered calls and voicemails. After reaching the consumer, the debt collector would be allowed either one contact or three attempted contacts per week. There would also be a waiting period of 30 days before contacting the family of a debtor who has died. New disclosures on “out of statute” debt and litigation: In the outline, CFPB proposes having debt collectors provide new disclosures to consumers regarding the possibility of litigation and whether the debt is beyond the statute of limitations. Waiting period before sending collection accounts to  a consumer reporting agency: Reporting a person’s debt would be prohibited under the draft outline unless the collector has first communicated directly with the consumer about the debt. The CFPB will next hear comments from a panel of small businesses in the industry, complete an analysis of how its proposals would impact small businesses, and take written comments from the public. Following those steps, the agency will issue a proposed rule for comment.  

Consumer card balance transfer activity is estimated to be $35B to $40B a year. Identify these consumers before they make transfers by using trended data.

With HELOC end of draw peaking, lenders must consider best practices and actions to take to manage and optimize their portfolios.

Experian defines how businesses should approach Identity Relationship Management for user authentication and devices to enable better fraud protection.

With a wave of HELOCs reaching the end-of-draw period, lenders are anxious to see how this will impact their portfolio. A new Experian study reveals likely consumer behaviors.

Bank executives don’t realize is they’re facing fraud because they’re literally inviting the fraudsters in bank branches.

Time heals countless things, including credit scores. Many of the seven million people who saw their VantageScore® credit scores drop to sub-prime levels after suffering a foreclosure or short sale during the Great Recession have recovered and are back in the housing market. These Boomerang Buyers — people who foreclosed or short sold between 2007 and 2014 and have opened a new mortgage — will be an important segment of the real estate market in the coming years. According to Experian data, through June 2016 roughly 800,000 people had boomeranged, with Los Angeles, Phoenix, and Sacramento housing the most buyers. Some analysts believe more than three million Americans will become eligible for a home over the next three years. Are potential Boomerang Buyers a great opportunity to boost market share or a high risk for a portfolio? Early trends are positive. The majority of Boomerang Buyers who opened mortgages between 2011 and June 2016 are current on their debts. An Experian study revealed more than 29 percent of those who short sold have boomeranged, and just 1.5 percent are delinquent on their mortgage —falling below the national average of 2.8 percent. This group is also ahead of or even with the national average for delinquency on auto loans (1.2 percent vs. the national average of 2.2 percent), bankcards (3 percent vs. 4.3 percent) and retail (even at 2.7 percent). For those Boomerang Buyers who had foreclosed, the numbers are also strong. More than 12 percent have boomeranged, with just 3 percent delinquent on their mortgage. They also match or are below national average delinquency rates on auto loans (1.9 percent) and bankcards (4.1 percent), and have a slightly higher delinquency rate for retail (3.5 percent). Due to their positive credit behaviors, Boomerang Buyers also have higher VantageScore® credit scores than before. On average, the overall non-boomerang group’s credit score sunk during a foreclosure but went up 10 percent higher than before the foreclosure, and Boomerang Buyers rose by nearly 14 percent. For people who previously had a prime credit score, their number dropped by nearly 5 percent, while those who boomeranged returned to the score they had prior to the foreclosure. By comparison, the overall non-boomerang and boomerang group saw their credit score drop during a short sale and increase more than 11 percent from before the short sale. For people who previously had prime credit, they dropped 2 percent while those who boomeranged were almost flat to where they were before the short sale. Another part of the equation is the stabilized housing market and relatively low loan-to-value (LTV) limits that lenders have maintained. In the past, borrowers most often strategically defaulted on their mortgages when their LTV ratios were well over 100 percent. So as long as lenders maintain relatively low LTV limits and the housing market remains strong, strategic default is unlikely to re-emerge as a risk.