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Archive for ◊ November, 2016 ◊

SYDNEY, August 16, 2016 Small businesses weighing up their options for funding can now access a free credit score, with the launch of Know Your Score by OnDeck Australia.

The service, which is 100 percent online and free, will give small business owners access to a clearer picture of their financial situation and eligibility for a business loan.

OnDeck Australia has talked to thousands of small business owners since launching in Australia this year, and what we see time and again is a lack of awareness about the funding options available to them.

Many businesses dont realise that they already have a credit score which is used by lenders such as OnDeck. Once they know this information, the business owner has a much clearer picture of the financing options available to help grow their business, said Cameron Poolman, CEO of OnDeck Australia.

The business credit score is a key indicator used for assessing credit or loan applications. OnDeck says being aware of this score will help small businesses make informed financial decisions.
Some business owners think that getting a loan is in the lsquo;too-hard basket. They arent sure of their chances and see the process as onerous and time consuming and it certainly can be with traditional bank lending. But OnDeck uses technology to assess loan applications in as little as one day, so its actually much easier and more accessible than many people assume, Mr Poolman said.

Gaining clarity about their business credit score is an important step in the planning process for businesses looking to grow, and Know Your Score will now make it easier, faster and more accessible for business owners to understand their borrowing options, Mr Poolman said.

Small business owner Alison Dean said she was pleasantly surprised by her positive business credit score. Her business, The High Tea Party, has operated for ten years, and holds six events throughout the year across Australia and New Zealand, which can make cashflow a challenge.

We have thousands of ladies attend each event over a two-day period, and so there are lots of upfront costs for marketing, freight, venues and suppliers. While we generally cover this through careful cashflow management, its great to know there are other options that could take the pressure off in the future, Ms Dean said.

She said applying through the Know Your Score website was easy and fast.

I work from home and fit a full-time week in around my husband and three kids, so I dont have time to be visiting banks, digging around for paperwork or anything like that. I used Know Your Score on my mobile phone, it took me less than two minutes and I got the score straight away. It was a positive score too!

I dont know if I will apply for a loan yet but I like having the option in my back pocket, so to speak. As they say, knowledge is power, said Ms Dean.

The data for the Know Your Score website is provided by credit bureau Veda. To apply, small businesses simply enter their details and receive the free credit score as soon as the application has been submitted.
###

Media Contact:
Belinda White
Honner, Sydney
+61 (0) 2 8248 3750
+61 (0) 421 193 668
belinda@honner.com.au

About OnDeck Australia
OnDeck Australia is a technology-enabled small business lender 100% focused on giving small businesses on-demand access to working capital. Our vision is to power the growth of small business through credit and technology innovation. In Australia, OnDecks proprietary small business credit scoring system, the OnDeck Scorereg;, incorporates hundreds of data points from dozens of sources. Using advanced technology and analytics, OnDeck Australia assesses creditworthiness on a business actual operating performance and not solely on the owners credit. For more information please visit www.ondeck.com.au

Category: Credit Help  | Tags:  | Comments off

Ricart Credit Factory, a specialized subprime unit of Ricart Automotive, expects to sell a healthy number of vehicles to consumers with ailing credit ratings.

Sales and Finance Director Tony Davis admits that being part of a big Columbus, OH-based dealer group such as Ricart helps his numbers. But he adds much success stems from an approach driven by a process intended to not only sell cars but also help customers rebuild their credit.

Ricarts Credit Factory uses search-engine optimization, search-engine marketing and local radio and TV ads to drive leads to its website and business-development center. It also purchases third-party leads.

Leads are pursued by 10 staffers who each make 20 to 25 daily follow-up calls. Were making 200 to 250 calls a day to sell 100 cars a month, responding to each lead within 30 minutes of receiving it, says Davis, whos been at Ricart for eight years, in automotive retailing for 18 years.

The Credit Factory is a stand-alone facility adjacent to Ricarts Used Car Factory, both on Ricart Automotive Group property. Overall, the Used Car Factory sells about 750 units a month.

Subprime customers go through the Credit Factory first. The sales approach is an invitation to allow the Credit Factory to help repair a customers impaired credit.

Most of these shoppers present with a 450 to 620 credit score. Scoring varies, but 550 to 649 is poor, and below 550 is bad, according to Experian.

Davis works with 35 banks and two credit unions. Because of volume, we have better insight into bank programs and how to work these deals and we have leverage with the banks and lenders, he says.

Once the Credit Factory sales department processes leads, shoppers are invited to visit.

We get them motivated to come see us, Davis says, so we learn who they are to better understand their credit challenges. By asking them to talk about past credit problems the process might humble them a little but it sets up the conversation to discuss how buying from Ricart and making regular payments benefits their credit future.

Equifax in a 2015 commentary supports this strategy, citing data on more than 210 million loans. Subprime auto lending has been delivering a viable second chance for many consumers who fell on hard times and are struggling to rebuild their credit- risk standing.

Our data also shows that subprime is a well-managed and stable subset of automotive lending, a subset that has been a key driver of our overall economic health, Equifax says.

Davis says his subprime shoppers typically are age 25 to 42 and have visited three to five other car lots before contacting the Credit Factory.

Theyve been told a lot of stories and have been turned down several times, so theyre skeptical, Davis says. Its always news to them when we share that consistent car payments made to a buy here-pay here dealer does nothing to help them reestablish their credit.

As an indicator of success, Davis cites performance results.

  • A 42% lead appointment-set rate.
  • Website and online leads closing rate of 22.9%.
  • Walk-in closing rate of 56.3%.

For a comparison to industry averages, Greg Goebel, who is CEO of training company DealerStrong and a special-finance specialist, shares benchmarks compiled from dealer reporting and an analysis of millions of transactions each year. Goebel says:

  • The benchmark (75th percentile) dealer sets appointments with 57% of valid leads.
  • Phone call lead-to-dealership-visit: 49%.
  • Benchmark for website and credit-app leads closing ratio: 11%.
  • Walk-in closing rate average: 32%.
Category: Auto Lending  | Tags:  | Comments off
Second chances pay off
Saturday, November 26th, 2016 | Author:

Giving second chances to consumers with credit profiles previously tainted with foreclosures and short sales is paying off.

Foreclosures, short sales and bankruptcies will fall off the credit files of 2.5 million consumers between June 2016 and June 2017. More than two-thirds of those consumers now have a credit score in the near-prime, prime or superprime tiers, Experian said last month.

Those homeowners who short sold between 2007 and 2010 and have since opened a new mortgage loan are making auto loan payments on time. Their average 60-day delinquency rate is 1.2 percent, compared with the 2.2 percent national average.

Consumers who foreclosed between 2007 and 2010 and opened new mortgage loans are also making payments on their auto loans. Their average delinquency rate was also below the national average at 1.9 percent.

The shift goes to show that the auto lending market is healthy. The average auto loan balance per consumer was $18,361 in the third quarter, the highest level since the third quarter of 2009, according to TransUnions Q3 Industry Insights Report.

Loan amounts are at record highs since 2009 because more consumers have become creditworthy enough to take advantage of them. Their credit profiles are improving as the post-recession economy recovers. The industry and economy run in cycles, so who knows what the future holds. But at least for now, consumers who suffered a few years ago will have another deserved chance.

Category: Auto Lending  | Tags:  | Comments off

After a contentious and unpredictable election, Donald Trumps incoming presidency and a continuing Republican-led Congress may be a win for dealers and auto lenders hoping to curtail auto lending guidance by the Consumer Financial Protection Bureau.

A bill to limit the CFPBs guidance, HR 1737, or the Reforming CFPB Indirect Auto Financing Guidance Act, passed the House of Representatives by a wide margin, 332-96, in November 2015.

Its companion bill, S. 2663, was introduced in the Senate in March 2016 and referred to the Committee on Banking, Housing, and Urban Affairs.

Although the legislation passed easily in the House, it likely will face a tougher challenge in the Senate, especially because Sen. Elizabeth Warren, a Democrat from Massachusetts, helped create the CFPB before she became a senator.

If the Senate bill were to pass, though, a Democratic White House would likely have been a back-stopper. President Obama had opposed HR 1737, saying it would revoke important guidance designed to prevent discriminatory pricing of auto loans.

Now, with a Republican president-elect, the bills have a higher chance of being signed into law.

The bills effect

If the bills pass, they would nullify the CFPBs 2013 auto lending guidance that says lenders should either eliminate or limit dealerships ability to adjust the retail margin on consumers auto loans. Any subsequent guidance would have to follow these bills lead.

The CFPB oversees lenders, not dealerships, but it has said that adjusting retail margins on auto loans on a case-by-case basis can lead to discrimination, even if that discrimination was unintended.

The Financial Choice Act of 2016, which also aims in part to dismantle the CFPBs auto lending guidance, passed in the House Financial Services Committee in September.

Provisions outlined in all three pieces of legislation, in the same wording, would require any new auto lending guidance the CFPB issues to:

Provide a public notice and comment period before issuing a final guidance on auto lending.

Make all studies, data, methodologies, analyses and other information relied on to determine the guidance available to the public.

Redact information that is exempt from disclosure.

Consult with the Board of Governors of the Federal Reserve System, the Federal Trade Commission and the Department of Justice.

Conduct a study on the costs and impact of such guidance to consumers and female-owned, minority-owned, veteran-owned and small businesses.

Under fire

The CFPB has come under fire in recent months. Last month, the US Court of Appeals ruled that the regulator is unconstitutionally structured and must abide by the statute of limitations in all enforcement actions.

The CFPB did not indicate that it will stop or delay actions against auto lenders as a result of the ruling, and other regulators, such as state attorneys general and the Federal Trade Commission, will likely still investigate auto lending and Famp;I product sales.

Under the ruling, the president will have the power to supervise and direct the CFPB director and to remove him or her at will. The previous CFPB structure allowed the director to be autonomous and fired by the president only for cause.

The courts decision says the CFPB can continue to operate as an agency, but it must operate as an executive agency like other executive agencies that are headed by a single individual, such as the Department of Justice or Department of the Treasury.

Supporters and critics

In general, Democrats have been supportive of the CFPB. Republicans, on the other hand, have been critical. David Missimer, general counsel for Automotive Compliance Consultants, said last month that under a Republican administration, the CFPB would more likely have to abide by limits set forth in the bills, while under a Democratic administration, the CFPB would be less likely to change.

If the Senate acts quickly and votes on the bill to nullify the CFPBs guidance before President Obama leaves office, it is less likely to be enacted. If the Senate pushes its vote to 2017, however, the bill is much more likely to be enacted under the incoming Republican administration — a potential gain for auto dealers and lenders but a loss for the watchdog regulator.

Category: Auto Lending  | Tags:  | Comments off
OneSavings Bank (LON:OSB) Broker Roundup
Monday, November 21st, 2016 | Author:

OneSavings Bank plc (OSB) is a United Kingdom-based lending and retail savings company. The Company operates through three segments: Buy-to-Let/SME, Residential Mortgages and Personal Loans. The Company provides Buy-to-Let mortgages secured on residential property held for investment purposes by experienced and professional landlords and commercial mortgages secured on commercial and semicommercial properties held for investment purposes or for owner occupation. It also provides residential development finance to small and medium sized developers and secured funding lines to other lenders. The Company lends to owner-occupiers with a geographical bias towards London and the South East. OSB also offers bespoke residential first charge, second charge and shared ownership mortgages through specialist brokers. It also provides secured funding lines to other lenders. The Company also offers unsecured lending services.

Category: Secured Funding  | Tags:  | Comments off
Category: Credit Scores  | Tags:  | Comments off

Applying for small business credit can be time-consuming and frustrating. Research from the Federal Reserve Bank of New York shows the average small business owner spends more than half a standard work week (26 hours) researching and applying for financing.

Unfortunately, putting in that time and effort doesn’t always pay off. The Nav American Dream Gap Report survey found that 45% of small business owners whose applications for financing were declined said they were turned down more than once. And research from the Federal Reserve’s 2014 Joint Small Business Credit Survey found that in the first half of 2013, a quarter of firms with employees and nearly a third (31%) of those without employees didn’t even bother to apply because they didn’t believe their applications would be approved.

While no one wants to be rejected when they apply for credit, small business owners are at a particular disadvantage because major consumer protection laws don’t always apply to entrepreneurs seeking financing for their ventures.

Here are three “gotchas” that may come as a surprise:

1. You Don’t Get a Free Credit Report or Credit Score

Consumers who apply for credit and are turned down or charged more because of information in their credit report must be given a disclosure telling them which credit reporting agency supplied their report to the lender so they can order a free copy. When a credit score is used in the decision, the applicant will also be given their score–the actual one the lender used–along with the main factors affecting it. These disclosures give consumers the opportunity to check credit reports for errors, and to understand why they didn’t get the credit they wanted.

But there are no similar freebies for business owners when their business credit reports or scores are used to turn them down for financing. It’s no surprise then, that in Nav’s survey, nearly half (45%) said they didn’t know they had business credit reports, and the majority (72%) didn’t know how to get that information.

Category: Credit Help  | Tags:  | Comments off
Mortgage Debt Rises, Federal Reserve Shows
Wednesday, November 16th, 2016 | Author:
Category: Home Mortgage  | Tags:  | Comments off
Clinton Pledges to Cut Small Bank Regs, Embrace Fintech
Tuesday, November 15th, 2016 | Author:

The fact sheet highlighted the fintech industry, saying Clinton wants to harness the potential of online lending platforms and work to safeguard against unfair and deceptive lending practices.

While Clinton has previously pledged to cut regulations for small banks, the op-ed is her most high-profile statement on the issue to date and comes after the Democratic National Convention pushed her agenda in other areas further to the left. Privately, some bankers have wondered how committed Clinton is to regulatory relief. By making it a core piece of her plan to help small businesses, she appears wedded to the proposal.

Her mention of online lending is also significant. The fintech sector has been expanding by leaps and bounds during the past few years but neither Clinton nor Republican presidential nominee Donald Trump has appeared to pay any attention to it. The fact sheets brief mention of it signals that Clintons campaign sees its potential to expand credit, but refers to fears by some consumer groups that some fintech firms engage in dubious practices.

Moreover, the Clinton plan touches on other areas important to banks, including fostering the development of community development financial institutions and expanding the authority of the Small Business Administration.

It calls for expanding and making permanent the new market tax credit and doubling support for CDFIs and the State Small Business Credit Initiative.

Additionally, Clinton wants to give the SBA administrator the authority to continue providing 7(a) loan guarantees to small businesses if demand is higher than the yearly cap, according to the fact sheet. It also calls for expanding the SBAs working capital guarantee programs and lowering capital fees for businesses in underserved communities.

Category: Credit Help  | Tags:  | Comments off
Julie Jason: What do you know about credit scores?
Monday, November 14th, 2016 | Author:

Just how important is it to know about credit scores? You may think you dont need to know your score if you are not applying for a mortgage or a car loan, but you may be wrong. Low scores can cost you money, so it pays to know your score.

Credit bureaus, such as Experian, and nonprofit associations, such as the Consumer Federation of America, study the state of credit. Based on a recent survey, the CFA reports that consumers greatly underestimate the cost of low credit scores.

Here is an example of how a low score can affect a car loan, which I will put to you in the form of one of the CFA survey questions:

On a $20,000, 60-month auto loan, about how much more would a borrower with a bad credit score pay than a borrower with a good report?

a. Under $1,000

b. $1,000-$3,000

c. $3,000-$5,000

d. More than $5,000

If you answered anything other than d, you were wrong, as were most of the people surveyed. Only 22 percent knew the answer.

What are the types of vendors who can use a credit score to determine the price they will charge you for a services? Consider this list:

a. Mortgage lender

b. Credit-card issuer

c. Home insurer

d. Cellphone company

e. Electric utility

f. Landlord

g. All of the above

The correct answer is g.

Fifty-three percent of those surveyed knew that electric utilities can use credit scores to determine an initial deposit, for example.

Roughly two out of three knew that scores may be used by home insurers (66 percent), cellphone companies (68 percent) and landlords (70 percent).

Mortgage lenders and credit-card issuers often use credit scores to help decide whether they will extend credit and, if so, at what price, according to the CFA. In most states, many auto and home insurers use specialized credit scores to help determine annual premiums. Cellphone companies, electric utilities and landlords may use credit scores to decide whether they will require a security deposit and, if so, how large it should be.

What about this question: Which of these groupings contains three factors that are all used to calculate a credit score?

a. A persons age, missed loan payments and marital status

b. Missed loan payments, high balances on credit cards and ethnic origin

c. Marital status, high balances on credit cards and personal bankruptcy

d. A persons age, high balances on credit cards and ethnic origin

e. Missed loan payments, high balances on credit cards and personal bankruptcy

The correct answer is e.

More than 40 percent of those surveyed assumed that marital status and age affect credit scores. However, that is not the case, according to the CFA. Neither is ethnic origin.

And here is the final question: When are lenders that use credit scores required to inform borrowers of the credit score used in the lending decision?

a. After a consumer applies for a mortgage

b. On all credit-card, auto and other consumer loans when a consumer doesnt receive the best terms and/or lowest interest rate available

c. Whenever a consumer is turned down for a loan

d. All of the above

e. None of the above

The correct answer is d.

About one out of two survey respondents knew that lenders were required to inform borrowers of their use of credit scores after a mortgage application, when a consumer does not receive the best terms on a consumer loan, and whenever a consumer is turned down for a loan, according to the CFA.

How did you do on these questions? If you would like to test yourself on the remaining CFA survey questions, go to http://tinyurl.com/gvdry7c.

The Consumer Federation of America, along with VantageScore Solutions, contacted 1,005 adults across the country for this survey. The CFA is a nonprofit association whose goal is to advance the consumer interest through research, advocacy and education.

_______________

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author, welcomes your questions/ comments (readers@juliejason.com). To hear Julie speak, visit www.juliejason.com/events.

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