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 Technical Rules for 2017 you should be aware of.  Did you know there are new rules related to the application for new licenses, transferring a license, and criminal history of CAB owners?  Much of this was covered during CAB Consulting’s “CAB II” project that many clients and members took advantage of. 

*The language for rules and transfers removes the part mentioning that you need to wait on the OCCC’s approval to operate a CAB while the license is being transferred. The transformer assumes all responsibility of the license until the license has been transferred to the transferee. 

**Criminal History can affect license holders. This affects anyone with a State license from a concealed handgun license to a Credit Access Business license. In the eyes of Texas, it is a privilege to maintain a Texas license, and therefore license holders must be law abiding residents.  

Here are several areas of infraction that could compromise your CAB: 

Theft, assault, any offense that involves misrepresentation, deceptive practices or making false or misleading statements. 

Any offense that involves breach of trust or other fiduciary duty.

Any criminal violation of a statute governing credit transactions or debt collection. 

Failure to file a government report, filing a false report or tampering with a government record. 

Here is a link to the rules: http://occc.texas.gov/sites/default/files/uploads/pub/rules/cab-adoption-fc-010517.pdf 

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.