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AUTOMATED UNDERWRITING VS MANUAL UNDERWRITING Just this month the CFPB (Consumer Financial Protection Bureau) reported FIVE Federal Agencies are looking into how Financial Institutions use Artificial Intelligence to support risk evaluations before approving a consumer request for a financial loan. Ironically, the investigation will indirectly involve some of the elements mentioned in last month’s article titled the 9 Credit Scores You Never Knew Existed by providing insight into how a consumer’s credit behavior as well as credit reporting errors support quick pros and cons within the automated decision-making process. The early question, is how does it affect consumers? How is AI affected by a creditors input of adverse data? Could the FICO score be considered AI? Can it disrupt loan approvals when data is input incorrectly by your creditors or whom you do business with? Let us take a closer look at one example that is a hot topic right now by using a borrower identified as Sam to provide insight in how the insertion of correct data will negatively impact his credit report by using one of Sam’s creditors. Sam has 1 collection account reporting on Equifax, Experian, and TransUnion from the US Department of Education. Sam has been avoiding his owed debt for years, finally the US Department of Education closes Sam’s account because of no payments received for the last 270 days or 9 months. The account reports closed/transferred with a zero owed balance reporting a 120 day late pay within the account/pay status section and [...]

9 CREDIT SCORES YOU NEVER KNEW EXISTED You already know about your credit risk score, more commonly known as your FICO Credit Score. That is the one we normally think of when we talk about credit scoring but are your aware that you are being analyzed based on other lifestyle choices and these Nine other types of Consumer Scores that are relatively unknown — that affect you tremendously: Revenue Score - This score measures how much money you are likely to make the creditor. This is measured by rank-ordering your revolving credit accounts by how much of a revenue source you might be in the future. Bankruptcy Score - Predicts if you are likely to declare bankruptcy. It looks at data such as how many high-balance and delinquent accounts you have. Creditors know that anyone who has a high number of late payments or maxed-out accounts is headed for trouble. Response Score - You know all those “pre-approved” offers you get in the mail? Someone is tallying the number you throw away. The more offers you accept, the higher your response score. Attrition Score - This score addresses the likelihood that you may leave one lender for another. If your score is high enough, you will get convenience checks in the mail; or even a personal phone call from the creditor, offering you incentives to stay with them. Behavior Score - This very specific score measures your overall performance with one creditor. Information includes how long you have had [...]

Additionally, FedLoan Servicing publishes reports identifying the borrowers that we service. When we first add loans for your school to our system, we will contact you to alert you of your loan volume and to discuss reports available to track your student population with us.