I recently walked in another loan officer’s office when I overheard his conversation with a client he was on the phone with. He was trying to tell her how to raise her FICO® Scores. However, the information he gave was inaccurate. After he finished the call, I asked him about his incorrect credit score comments to the client. He responded, “It doesn’t matter. She won’t know the difference.” This is not out of the ordinary. Loan officers too often give bad advice that end up hurting their clients. Why does this happen?
Another loan officer called me several weeks ago to ask me some specific questions a lender gave at a luncheon to several agents. We went through two issues and both times, the luncheon speaker gave substantive incorrect information. Then the caller said he told his clients something completely different and wanted to verify that the speaker was incorrect. But then he told me what he tells his clients, and it is something completely different. I was stunned. His suggestions were not accurate either. He has been costing his clients many credit score points!
Why does this happen? Because the client doesn’t know, and second, most consumers think loan officers know credit scores very well – especially the more experienced one. Additionally, there is no one there to call out the loan officer to tell them that the information is incorrect. So practically any loan officer can say anything, and many consumers can consider it Gospel, when often, the suggestions are incorrect.
The Difficulty of Validating Loan Officers
Finding the right answers to a credit score question is very difficult. Sometimes a person can ask multiple loan answers and then quickly discover, that the initial answer may or may not be correct. There is no one there to back check the information given to anyone.
The Stunning Results
I have been on the SAFE MORTGAGE test writing committee since 2009. About 50 of us are scattered throughout the country and have to come together every few years to help write and review national test questions. Those that deal with credit and credit scores are particular interest to me, and to many other of the committee members.
One particular session, we reviewed several questions on credit scores that were very basic. There was nothing remotely advanced or required a lot of experience. The success rate was varying between 21% and 42% passage rate. The testing company wanted to discard the questions because the pass rate was so low. The committee members pushed back and the questions remained in the exam. It was the first result to show that loan officers are quite inept with understanding credit scores.
Other surveys I have done have validated those results. The passage rate is slightly higher to the low 40s. The questions being missed are basic questions like how long an inquiry impacts a credit score. Or how long does someone have to shop an auto loan or mortgage to have it only count as one hard inquiry for the Classic FICO® Scores. How long does a bankruptcy stay on a credit report. These are not hard questions, but loan officers are failing at remarkable levels.
Some lenders have told their loan officers to not give credit score advice because of some of the complaints that have come in.
The problem with credit scores is they are multi-dimensional in that there are an array of possibilities. In one instance, a suggestion could be true. While another situation, that suggestion could be totally false. But lenders tend to give the same suggestion regardless of the differences or changes in circumstance from one client to the next.
What tends to happen is that a lender may give a suggestion that improves a credit score a few points – say up to 10 points, when the score could have improved 40 or 50 points if the lender could recognize all the issues. But lenders practically never recognize all the underlying issues and leave the consumer short of where they could have been.
What Can You Do?
Recognize that loan officers are not credit score experts! They are not. They make too many mistakes and a consumer will be hard pressed to see that. It does not matter how long they have been in the business. They don't take the time to learn all the ins and outs about credit scores.
My Credit Plan has done a fantastic job in identifying all the underlying issues in a credit score. The average score improvement for 2022 was 76 points. When a program has such stellar results, you can tell they are hitting all the relevant factors and provides clear and precise answers for consumers.
Want to improve your scores? That is what you need.