TheMReport — News and strategies for the evolving mortgage marketplace.
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20 | TH E M R EP O RT FEATURE they have," says NerdWallet in its 2015 American Household Credit Card Debt Study. "In fact, as of 2013, actual lender-reported credit card debt was 155 percent greater than borrower-reported balances." American consumers struggle to keep track of their credit card balances. Roughly 20 percent of people with a credit card say they have been surprised at least some of the time by the bill that comes in the mail. "In most cases, people were more embarrassed by their credit, than getting dumped," adds McQuay. Unlocking the 'Black Box' I n the past, checking one's credit score was severely limited—and usually came with a cost. But with the changes stemming from the Credit Card Accountability Responsibility & Disclosure Act of 2009, free ver - sions emerged to compete with the fees charged by the three ma- jor credit bureaus (TransUnion, Experian, and Equifax). Today, more than 40 percent of con- sumers check their credit scores for free, according to Bankrate, though just 46 percent of Ameri- cans have checked their credit score within the past year. "Historically, credit has been a very confusing black box," says McQuay. "I think consumers in general are more interested in be- ing on top of their credit." The top credit management apps, such as Mint.com and CreditKarma, not only offer their users credit management tools, but also shed a light on spending habits, provide bill reminders, and help us- ers work toward their savings goals. And with more people accessing information via smartphones and tablets, they make perfect sense for the on-the-go millennial. In mortgage lending, many firms are turning to credit manage - ment programs to keep potential buyers in the pipeline. In addition to providing financial education— through blogs, brochures, first-time homebuyer seminars and the like, lenders have the opportunity to offer credit management services to applicants who may not yet be qualified for a mortgage. The move not only serves to encourage potential homebuyers who may otherwise feel dejected, but also conserves the customer base that lenders work so hard to attract for future transactions. One of these proprietary services is Homebuyer's Club powered by iQualifier, from Credit Plus, Inc. The program, which can be privately branded, provides enrollees with analytic tools to monitor credit and set an action plan. The service's "Lender Portal" allows lenders to create reports that set and monitor participants' target scores, giving lenders the leverage to customize marketing messages when a target is reached. The company claims that roughly 20 percent of rejected applicants return to the lender following enrollment. Despite the prospect of more first-time homebuyers in the mar - ket, McQuay says it is important for lenders to stress that when it comes to credit, slow and steady wins the rate. Although people may be able to check their credit more frequently, it takes time to pay off debt, save for a down payment, and raise a credit score. "I think the lenders are in a spot where they could really help," says McQuay. "I think they want to help [consumers] get back to a state where they can buy a home. This is a much healthier approach." CHAD JAMPEDRO is the president of GSF Mortgage Corp. With more than 20 years in business, GSF Mortgage Corp. has embraced the next generation of homeowners with its GoGSF brand, continuing its dedication to flexible and transparent lending. With more than 50 locations across the country, GSF Mortgage is continuing to grow and is always "Lending in Your Favor." Reach Jampedro at cjampedro@gogsf.com. SIDEBAR Millennials Tell All Millennials Give Their Take on the Homebuying Process D espite all the doom-and-gloom that surrounds millennials' uneven position in housing, there are countless success stories. They're the homeowners who beat all the odds—rising above high rents, student- loan debt, tighter lending measures, and a shrinking housing inventory—to capture their share of the American Dream. More than 65 percent of renters say obtaining a mortgage is somewhat or very difficult, according to the Home Survey from the National Association of Realtors. About 5 percent of renters say they've tried and failed to obtain a mortgage, and 51 percent say they have not tried and don't feel confident they could obtain a mortgage. Renters cited affordability and the difficulty of saving for a down payment as the greatest barriers to getting in the front door. Yet, many millennials are finding their way into homeowner - ship. While the millennials we spoke to say securing a mortgage wasn't always an easy process, they also say they wouldn't have it any other way. With a little bit of saving, mortgage education, and a lot of questions along the way, they say buying a home is simply a matter of preparation. Alyssa Schwabe, a 27-year-old content and social media coordinator, says creating a budget with her husband before ap - plying for a mortgage was key. "We were living in an apartment at the time and paying rent, so each month we would budget what we thought a mortgage pay- ment would cost, paid our rent, and put the rest into savings," says Schwabe. "We were able to get into the habit of not having that extra money but still saving for a down payment."