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How to Tell if Your Loan Software Can Provide Sufficient External Data Access

Posted by Chris Carlson | Thu, Jul 18,2019 @ 08:40 AM

There are few things worse than making a long-term investment in a piece of technology and finding out a few months down the road that it’s obsolete or can't deliver. As a young kid, my older brother and I petitioned our parents for a video game system. For anyone familiar with Atari systems, which happened to be where all of the hoopla and hullabaloo was back in the mid-1980s, they will remember that there were several versions of systems instead of one system that took center stage and could play all of the games.

Lo and behold, we got a system that was soon afterward discontinued and only had a limited number of games – none of which were the most popular at the time. In retrospect, maybe that system was on the clearance rack and our parents had no idea why. The point is that they gave in a few years later and bought us a new system.

So what does this have to do with loan software? The answer is everything, especially when you’re referring to investing in a platform that can’t accommodate a lender’s need for robust external data access.

A loan origination system with insufficient access to external data puts a lending institution at a severe disadvantage. No bank or credit union can fully achieve its goals for portfolio growth or surpass its competition if it doesn’t mitigate risk effectively. Before you know it, it’ll be flooded with bad loans.

Lenders need to think long-term when selecting a loan origination system and external data access capabilities. Otherwise they’ll be right back where they started in a few years because the platform they selected can’t grow with their operations. Here are just a few basic things to consider when deciding whether a particular loan origination system fits your external data access needs:

  • Access to consumer credit data providers: Without a doubt, the loan origination system you are considering should include access to the three main consumer credit reporting agencies: Equifax, Experian and TransUnion. In addition to the primary credit bureaus, you’ll want to ask your LOS provider for a listing of alternative credit data providers it supports. ID Analytics and LexisNexis are a few providers that offer innovative data to augment decisioning.

  • Support of all Credit bureau products in addition to credit reports: Consumer credit bureaus maintain an extraordinary amount of data and have invested in developing products leveraging it. These products range from risk scores to fraud alerts. Verify with your LOS provider that you can retrieve these bureau products and integrate of the data into the decisioning process.

  • Intelligent incorporation of credit bureau reports: Your loan origination systems needs to allow for previously retrieved credit reports to be re-used for decisioning within a certain time frame. Doing so provides additional cost savings. Your system should also be able to de-duplicate trade lines when a trade line is reported by an applicant as well as provide the ability to automatically include new application credit bureau reports in applications for cross-sell opportunities.

There are several other factors you should consider when selecting loan origination system that fits your goals and helps drive portfolio growth. Unlike a bad breakfast due to an unreliable toaster, don’t get burned by choosing loan software that doesn’t fully meet your external data access needs or growth strategy.

CCUCalifornia Credit Union found the right fit by partnering with MeridianLink for the LoansPQ loan origination system, LendingQB mortgage origination system and XpressAccounts platform for deposit account opening and funding. Consumer loan production for last year exceeded production goals by 110 percent or $294.9 million, and the credit union’s mortgage process was reduced by seven calendar days.

“Overall, our partnership with MeridianLink has been a successful one,” said Patrick Zarifian, SVP, Chief Lending Officer, California CU. “We really trust that California Credit Union will receive even more benefits as our relationship and technology are strengthened moving forward.”

Want to learn more about this financial institution’s success story? Please click the button below to download a copy of our case study.

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Photo Credit: Nelo Hotsuma

Topics: Best Practices, Loan Software, loan origination system, external data access

Written by Chris Carlson