December 2016 - Getting Serious About Diversity

TheMReport — News and strategies for the evolving mortgage marketplace.

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28 | TH E M R EP O RT FEATURE MCS Valuations is committed to providing the best possible service and most reliable value to our clients. Backed by industry-leading data and experts with decades of experience, MCS Valuations is your trusted resource for all of your valuation needs. 800.791.7145 | MCSVALUATIONS.COM | INFO@MCSVALUATIONS.COM | 350 HIGHLAND DRIVE | SUITE 100 | LEWISVILLE, TX | 75067 years. That said, it's important to keep in mind not all provide equal value for credit scoring. Telecommunications payment data, for instance, has many of the same qualities as data reported in traditional credit files; in fact, telecom companies occasionally report customer account status to credit bureaus. Yet this informa - tion is present in less than 10 percent of bureau files—and when it is present, it often reflects nega- tive payment history. More complete telecom data is available from alternative sources that include positive as well as negative information. That's important for expanding credit access since it may provide cur - rent evidence of good financial behavior missing from bureau files. For consumers with no cred- it history and others overcoming financial problems, opening a telecom account can now serve as a first step in establishing or re- establishing creditworthiness. Property and public record data is another good example of useful alternative data. These data sources tend to be inclusive of large groups of consumers and can provide both positive as well as negative information relating to credit risk. Alternative data sources must make the grade across several important dimensions: • • Regulatory•compliance. Any data source must comply with all regulations governing consumer credit evaluation. It's also criti - cal to think ahead about how creditors will communicate with consumers: Will credit decisions driven off of the data be palatable and defensible? Can the role the data plays be clearly explained to consumers and regulators? • • Depth•of•information.•The deeper and broader the data, the greater its value. Consider a repository of rental data: Does the information reflect both on- time and late payments? • • Scope•and•consistency•of cover - age. Since the goal is to score as many consumers as pos- sible, useful databases must cover a broad percent of the population. For instance, with more than 90 percent of U.S. adults using cell phones, mobile companies are a data source with broad coverage. • • Accuracy.•Inaccurate data compromises its predictiveness and, therefore, its value. Data repositories must follow mature data management processes to ensure accuracy. • • Predictiveness. The data should predict future consumer repayment behavior. For example, analysis of public record databases shows that, in many cases, consumers who have been at their addresses for longer periods are more likely to pay credit obligations than those more transient.

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