We have been hearing a lot lately about the continued decline of retail business in the US.  Zales and Jared jewelry retail stores are the latest to announce closures of hundreds of locations.

Online is booming and it seems like Amazon rules the world.  If your business does not have an online presence you are missing out on a lot of opportunity because your pure brick & mortar market is shrinking by the minute.  Consumers are evolving and many low to middle income consumers are willing to do more and more to get access to credit at crucial times.  How will you engage with this new dynamic?

Forbes.com featured an article that discusses how increased online markets are opening a consumer’s willingness to share their personal info online while also touting the strengths of today’s alternative data.  I included some excerpts below.

“People Are Plenty Willing To Share Personal Data To Get A Better Loan.”

• New research suggests that people are surprisingly comfortable sharing their data as long as it’s being put to good use, especially in the world of lending.
• A recent Harris Poll found a surprising consensus among American adults — 71% of those surveyed said they would be willing to share more personal data with a lender if it led to a fairer loan decision.
• More significantly, the Harris Poll shows that the majority of consumers feel unfairly treated by the current system.  More than 80% of African-Americans and Hispanics – and 7 in 10 of all adults – say they wish there were a better way to prove themselves to lenders.
• But in today’s era of large-scale data collection and unlimited computing power, the traditional credit score is showing signs of age and mathematical limitations.
• Consider some of the things credit scoring excludes: your job history, your roots in your town and thousands of other bits of information that are left untapped. It’s no wonder 70% of people polled say it’s difficult to get financial institutions to see them as anything but a number between 300 and 850.
• One-third of renters say credit scores have kept them from buying a home.   
• Alternative data simply means anything that’s not included in calculating a traditional credit score. It could include timely utility payments, history of holding down a job, even large debts you had years ago (outside of the traditional credit score models) that you successful paid off.
• Bringing that added data into the credit scoring decision creates a more nuanced picture of borrower risk, helping banks spot worthy borrowers further down the credit spectrum (and flagging troublesome borrowers who look good on paper).
•  The Omidyar Foundation found that in the six biggest emerging economies, using more data and machine learning techniques can get as many as 580 million unbanked people into the financial mainstream.”

Many of us are using “alternative data” with Factor Trust and Microbilt (often referred to as “Credit Reporting Agencies” or “CRA’s”).  If you are not, get on it as soon as possible!  

Factor Trust was recently acquired by Trans Union, and another CRA “Clarity Services” was acquired by Experian awhile back. In the future hopefully that will mean better things for how CRA’s are utilized by our industry and will also mean more robust access to credit for consumers.”

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

New bill: HB 877, from Chris Turner (Democrat out of Tarrant County, Represents Grand Prairie & portions of Arlington).

Caption: Relating to prohibiting certain telemarketing calls by a credit access business.
A credit access business or a representative of a credit access business may not make a telemarketing call, as defined by Section 304.002, Business & Commerce Code, to a consumer whose name and telephone number are on the Texas no-call list maintained under Subchapter B, Chapter 304, Business & Commerce Code.

The full text of the proposed bill mentions that you would be able to contact consumers with whom you have had done business with in the past, so long as it has not been more than 1 year since the last transaction.

Comments:  Our clients and Members to not typically “telemarket” or use outside telemarketing firms.  We are not aware of many CABs who do this but would be interested to see how “telemarketing” is defined.  Stands to reason that if someone has asked not to be telemarketed to that they are not telemarketed to.  Not sure why it is worth the effort to put this bill out.

Link: http://www.capitol.state.tx.us/Search/DocViewer.aspx?ID=85RHB008771B&QueryText=%22credit+access%22&DocType=B

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Many of you know there have been some recent ACH payment processor problems that have developed in our industry. In particular, online operators are being hit the hardest. I had (2) clients check in with me this morning regarding the shutdown of their ACH capabilities.

I was surprised to see them shutdown, as clients of CAB Consulting are licensed businesses. It has been my understanding that only unlicensed and unregulated online payday loan companies were the targets of these shutdowns, not compliant and legal licensed operators. It appears ACH companies are having a knee-jerk response and are suspending services first, then asking questions later.

If you have been impacted by this, there are some options in the market that I can tell you about. Also, check in with your ACH provider to to make sure you are informed about where things are now, and to avoid being blindsided.

Contact Michael Brown at CAB Consulting, 214-293-8676, or Michael@CreditAccessBusiness.com.

We are at a point in the year when many Credit Access Business owners who offer payday, installment, or title loans to Texas consumers increase their marketing and advertising efforts in hopes of serving those needing an extra financial cushion to get through the Holidays.  It is important that readers know there are some restrictions around off-site advertising.

Per Texas Finance Code Chapter 393, a Credit Access Business may not advertise on the premises of a nursing facility, assisted living facility, group home, or intermediate care facility for persons with mental retardation, or other similar facility subject by regulation of the Aging & Disability Services.

It is my opinion that many of our clients and members would not intentionally advertise or market to these consumer groups.  But, we should all be aware that employees who are out and about hanging door hangers, passing out flyers, etc may not think about it while they are on the premises of such facilities.  So, just head’s up and let’s all make sure we are thinking a few layers deep while we are working through a high demand higher action period of our business cycle.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.