Using AI for Your Credit Inquiry Letters

We are in the hottest housing market in a decade and a half. Between rising prices and low rates, buyers are jumping into the market. While this has increased demand for mortgages, lenders still need to make sure they are aware of the risks. Finding quick solutions to process applications and evaluate the risks each borrower presents is key to growing your lending business. 

Most buyers expect their credit scores to be checked, but many don’t expect to have to explain them. This makes a credit inquiry letter of explanation a potentially tricky part of the mortgage application process. Lenders must help borrowers understand which credit inquiries need to be explained and what kind of explanation is needed.

Confusion for Borrowers

Credit scores alone can be very confusing for consumers. Almost a quarter of Americans don’t realize they have more than one credit score. Low financial literacy means lenders can face an uphill climb getting borrowers to answer questions about credit inquiries quickly and effectively. Explaining the issues and the correct procedure for writing appropriate letters of explanation can be taxing for loan officers. This time-consuming hurdle can slow things down and keep loan officers from processing other applications.

Processing loan applications is especially difficult during the COVID-19 pandemic. With both borrowers and lenders avoiding in-person meetings as much as possible, it’s harder for loan officers to anticipate where a given homebuyer may struggle in the process. That can lead to lengthy games of phone tag that leaves both the lender and the borrower frustrated.

Enter: Artificial Intelligence

Loan officers and borrowers can meet through video conference calls to answer questions, but anyone who has spent 15 minutes troubleshooting a video meeting knows that it’s far from a perfect solution. Borrowers need someone responsive and knowledgeable to help them with their problems. However, machine learning means that they may not need a person at all.

Fintech companies like ATTUNE use artificial intelligence to help lenders walk their borrowers through the process of applying for a mortgage. ATTUNE’s AI technology not only explains the process to the borrower but also compiles the much-needed credit inquiry letters of explanation as the borrower applies. Instead of waiting 30 days to get your letters of explanation, they can be completed within 11 minutes of the borrower applying.

Knowing What Borrowers Need

Artificial Intelligence looks at thousands of mortgage applications to analyze patterns and anticipate problems. The customer-facing interface explains each step of the application to borrowers and prompts them to enter key information as they apply. Not only does it ask for the information, but it also helps turn it into a usable letter of explanation.

ATTUNE knows lenders don’t need explanations for soft credit inquiries, so borrowers spend their time explaining only the inquiries that matter. That saves time for the lender and the borrower. Plus, by putting together the explanations as the homebuyer applies, the AI gives lenders everything they need from the moment they get the application. That helps assess risk upfront, so lenders can prioritize applications and give borrowers a better idea of what is possible earlier in the process.

An example of ATTUNE’s AI platform screen for borrower credit inquiries.

Better Customer Experience

The Consumer Financial Protection Bureau says more than 1 in 10 mortgage complaints involve the application process. Borrowers want transparency and quick answers. Obviously, they are hoping to get the line of credit they want, but even if that’s not possible, they want to know sooner rather than later. By getting the full application, including the explanation for credit inquiries, lenders can know much earlier which applications are likely to be approved. It’s just one part of the customer experience that artificial intelligence can enhance.

By explaining why a consumer needs to answer these questions, fintech companies like ATTUNE cut down on confusion and anxiety in the process. Borrowers can move forward feeling confident that they have provided everything a lender needs, without the back-and-forth that can drag out the application process. Machine learning also means that the program can anticipate what a borrower is likely to want to put in the easy-to-use forms, speeding up the process even more.

End-to-End Solutions

AI turns a process that could involve dozens of phone calls and requests for documents into a centralized, cohesive experience. Everything the lender needs is in one place, and by partnering with businesses around the country, many of the documents can be pulled automatically without any extra effort from the borrower. All of that information is automatically scanned and plugged into the application. The program delivers it in a neat format that makes reviewing and approving the application a breeze for the lender.

The program also pulls other stakeholders into the process, letting them enter their information and communicate with one another. Centralizing all communication cuts down on confusion, and moving everything online cuts down on unnecessary in-person meetings during this pandemic.

The time savings can also be incredible. ATTUNE, for example, can take just two weeks to approve a loan and get a buyer into the home they want. Compare that to the 60 days the average application takes and the appeal to buyers is clear. It also means lenders can process more applications in less time, increasing profits and customer satisfaction.

Coming Opportunities

The mortgage business continues to grow, with Fannie Mae estimating there will be $1.5 trillion in home sales in the coming year. More than half of new homebuyers will be buying for the first time. Younger buyers want easy, responsive lending options they can access through their phones from anywhere.

By using AI, you can meet these new buyers where they are and use technology to make their entry into the mortgage market quick and painless. The program handles their questions and walks them through the process of gathering the information they need. That means more time for loan officers to find new clients and make sure the ones they have get the best service possible. Integrating AI into your lending business can multiply your opportunities while keeping customers happy and increasing the efficiency of your staff.