Overview
In a changing economic landscape with rising costs, avoiding common inefficiencies in loan processing can save time and money. Identifying key operational risks and how to mitigate them ensures smoother, more cost-effective operations.
Operational risk to avoid
Operational Risk to Avoid | Why it Matters? | Best Practices to Mitigate |
|---|---|---|
Pulling Credit on Frozen Files | A credit report security freeze means the bureau will not release data, resulting in a failed or blank report. This wastes money on an unusable credit pull and delays the loan process. | Verify & unlock first Ask applicants upfront if their credit is frozen. If so, have them lift the freeze (or provide a PIN/code) before pulling credit. This ensures you pay for a report only once, when it can be accessed. |
Borrower Changes | Adding or removing borrowers after initial application usually requires new credit reports and re-underwriting. That means duplicate credit bureau fees, additional labor, and potential delays (plus re-disclosure of terms if costs or loan terms change). | Confirm borrowers at start Indicate that they should use their credit vendor’s tool to add a co-borrower and if this isn’t available, then go to credco.com to add a remove a borrower(s). In addition you can take a joint report and remove a borrower vs pulling a new report for one borrower. |
Uncoordinated Bureau Outage Handling | If one of the credit bureaus is offline or unresponsive, credit requests can fail or return incomplete data. Without a plan, lenders might retry multiple times, inadvertently incurring extra charges and still experiencing delays in approvals due to missing credit information. | Monitor and adapt Check credit bureau status if a report doesn’t return promptly. Avoid repeated pulls during an outage. Instead, rely on available bureau data (if two of three bureaus responded) or pause until the affected bureau is back online. Communicate any delays to the borrower and continue other processing steps in parallel to mitigate time loss. |
Submitting Inaccurate Borrower Information | A mistyped name, SSN, or address can lead to a “no hit” or wrong credit file. The lender ends up paying for a report that cannot be used and then must pull a correct report later — doubling cost and time. It can also confuse underwriting with inconsistent data. | Double-check data Validate all personal information before ordering credit. For example, confirm the spelling of names and accuracy of SSNs/date of birth against IDs. Leverage system data checks (e.g., format validation) or run a quick ID verification. Getting it right the first time avoids costly re-pulls and keeps the process efficient. |
Duplicate Credit Report Pulls | Each unnecessary credit inquiry (pull) not only adds direct cost in bureau fees, but can also impact the borrower’s credit score with multiple inquiries and create fragmented data across reports. Redundant pulls mean you’re paying more for the same information, hurting per-loan profitability. | “Pull once” Order one credit report and use it throughout the loan lifecycle—share it across origination, processing, and underwriting instead of re-ordering. If you need an update, request a refresh or soft pull (when appropriate) rather than a new hard inquiry. Enable duplicate-check and set it to at least 30 days to prevent repeat orders, reduce fees, and keep data consistent. |
Outcome
You can identify key credit‑report risks to avoid and mitigate them early to improve operational efficiency and avoid added costs.