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Glossary

 

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A  
 

Attribute
An element of information used in decisioning that describes or summarizes one aspect of the analysis. For example, an attribute might describe the number of bankruptcies or the number of credit card payments made 30+ days past due. Attributes are used as the building blocks of automated decisions. Most financial institutions utilize a fairly similar set of standard attributes that have proven to be highly predictive. Zoot maintains a large set of pre-built industry standard credit attributes implement custom attributes for unique institutional requirements.

 

Audit
The step in the product development life cycle where Zoot produces a complete set of human readable reports based on sample data for the client to review. By manually calculating each scorecard, the client can verify decisioning calculations.

 
 

Authentication
The process of verifying an online user's identification. For prior users and employees, this usually is accomplished with a username and password. For Internet users applying for credit, it is based on information from their application and the credit bureau. It is common for an approved application to go through authentication before credit is granted. All of Zoot's products support authentication.

 
 

Automated Clearing House
The ACH Network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system governed by the NACHA OPERATING RULES which provide for the interbank clearing of electronic payments for participating depository financial institutions. The Federal Reserve and Electronic Payments Network act as ACH Operators, central clearing facilities through which financial institutions transmit or receive ACH entries.

 
 

Auto Validation
An objective automobile valuation supplied by a vendor.

 
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Booking
The final stage of loan processing. Booked loans are submitted to the appropriate agent and removed from all active processing components of the KairosSM loan origination system.

 
 

Bureau
Company that maintains a financial payment history on the general public. The credit bureau report will show how many credit cards and loans the consumer has, his/her original or high credit amount, current outstanding balances, if he/she has been late in making monthly payments, and any other credit companies that have requested recent information on the consumer.

 
 

Bureau Preference
Within credit decisioning, the ability to define which of the three consumer bureaus and two business bureaus should be accessed. Most commonly, a ZIP code preference file will define a hierarchy of preferences based on geographic territories. In the event that the bureau of choice is unavailable or responds with incomplete data (no hit or thin file), the other bureaus may be attempted in ranked order.

 
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Channels
A marketing term describing the different sources for client business. For example, direct mail, telesales, cross-sell, take-one, and campus table displays are typical channels for selling credit cards.

 
 

Client
Bank or other financial institution that contracts with Zoot to provide third–party consumer credit analyses, decisioning, or originating.

 
 

Conditional Routing
Customizing the flow of queues or tasks based on several user-definable conditions. Allows the normal workflow sequence to be modified to accommodate various application processing scenarios.

 
 

Consumer
The end user who acquires goods or services from our clients. A consumer may be an individual or a business. (Same as Customer.)

 
 

Consumer Credit Reporting Agency
See Bureau.

 
 

Credit Analysis
The bank evaluates credit applications on the following main points: credit history, collateral, capacity, and character. These are generally referred to as the four "C's" of credit.

 
 

Credit Application
An oral or written request for credit, typically referring to a form that records information about a potential loan customer that is used by a lending agency to determine the creditworthiness of the potential customer. The credit application records a customer's income sources, assets, outstanding debts, and other personal information required to make credit decisions.

 
 

Criteria
Standard rules or tests on which a judgment or decision is based; the specifications that a client uses for decision-making. For instance, a credit lender may wish to restrict credit limits based on an applicant's prior payment or bankruptcy history, or to offer premium products to customers with exceptional credit histories. Zoot's WebRules® GUI provides a graphical depiction of criteria to eliminate coding by hand and to increase business user control.

 
 

Cross-Sell
Offering an additional product for purchase. For example, "Would you like fries with that?" A financial example of a simple on-line cross-sell would be pre-approving a credit card to offer consumers when opening a checking account (DDA cross-sell). A sophisticated model, such as Zoot's Enterprise Cross-sell®framework, will not only include cross-sell, but will determine the products to offer based on known consumer information. Effective cross-sell is one of the most profitable applications available.

 
 

Customer
The end user who acquires goods or services from our clients. A customer may be an individual or a business. (Same as Consumer.)

 
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Data Sources
All interfaces and vendors that supply loan origination systems with automated information used in application processing. Zoot's Vendor Path solution provides configurable connections to a wide variety of data providers.

 
 

Debt Ratio
Relationship of a customer's total monthly income and total payment on debt. (Total monthly debt divided by income equals the debt ratio expressed in percentage form.)

 
 

Decision Engine
The actual interface that communicates with the credit bureaus to obtain a preliminary auto-pass or auto-fail decision, such as Zoot's SPOC®decision engine.

 
 

Decision Tree
A type of scoring model that presents decision points and characteristics on a "tree-like" chart. Imagine a family tree where each decision branches out into two smaller branches. The final decisions are the end nodes of each branch.

 
 

Decisioning
The process of obtaining an automated decision based on pre-determined pass/fail criteria.

 
 

Derogatory Credit
Credit history is a very important component of the credit evaluation process, and negative payment records are significant reasons for denying an application. Judgments, Liens, and Repossessions are, in general, prima facie reasons for denial.

 
 

Distributed Network
Zoot has developed an approach to networking that allows each core task to run simultaneously on multiple servers. As the workload increases, additional servers can be added without impacting current processing. Also, any machine experiencing an error or slowdown can be removed from the network without impacting overall performance. This network design has allowed Zoot to create a highly reliable and resilient network environment.

 
 

Documents
Any loan papers sent to the customer for regulatory compliance reasons.

 
 

Document Engine
The interface that electronically generates closing documents based on pre-defined specifications. Zoot Enterprises has built a sophisticated document management solution for the financial industry.

 
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ECOA (Equal Credit Opportunity Act (Regulation B))
The Equal Credit Opportunity Act (ECOA), as implemented in Regulation B, prohibits credit practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract). The ECOA also prohibits discrimination against recipients of public assistance and applicants who have in good faith exercised any right under the Consumer Credit Protection Act. In addition, the ECOA requires lenders to notify applications of any ECOA action taken on their application and, if credit is extended, to report the credit history to a consumer reporting agency in the names of both spouses listed on an account.

 
 

Exclusionary Criteria
An approach to developing business rules that specifies items that result in automatic failure. For example, a rule that declines or excludes consumers with a bankruptcy in the past 5 years would be exclusionary criteria. Exclusionary criteria are often used in conjunction with a scorecard or matrix.

 
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FCRA
The Fair Credit Reporting Act regulates the operation of consumer reporting agencies. The FCRA requires that all information reported must be accurate and that credit reports may be obtained only for the purposes set forth in the FCRA. In addition, the FCRA requires credit reporting agencies to disclose to consumers the substance and source of the information contained in the consumer's credit report. Any inaccuracies contained in a consumer's credit report can be disputed, and procedures for resolving such disputes are provided for in the FCRA. More information on the FCRA can be found at the Federal Trade Commission.

 
 

FICO Score
Fair Isaac developed the FICO score to assist lenders in evaluating credit-worthiness. A FICO score tells a lender how likely a consumer is to repay a loan or make payments on time. It helps lenders evaluate the delinquency risk of consumers based on their credit history. FICO scores range from 300 to 850. The higher the score, the lower the predicted credit risk for lenders.

 
 

Flood Disaster Protection Act
The law that requires a determination of whether improved real property (including mobile homes) used to secure a loan is located in a designated flood hazard area. Under this act, there are specific requirements regarding insurance requirements as well as a time frame for notification of customer.

 
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Graphical User Interface (GUI)
A user interface that provides a visual representation of complex computer code. Specifically, as related to decisioning and LOS, a GUI graphically depicts process flows and rules so that criteria does not have to be written by hand. Zoot has developed several cutting edge GUIs, including WebRules®, WebAITM, and Diakon®.

 
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Hash Table
A specific type of data table used to quickly filter out applications based on business-supplied criteria. The tables occur early in the application and typically filter existing customers or recent applicants, reducing multiple inquiries on a consumer's credit report.

 
 

Home Equity Line of Credit (HELOC)
A type of credit granted to borrowers that allows them to access the account via various means using the equity in the property as collateral. This type of account is charged interest on the outstanding balance only. There is normally a credit limit associated with the line of credit that is the maximum the borrower may draw against. The interest rate is usually tied to the prime rate with a margin.

 
 

Home Equity Loan
A type of loan granted to borrowers that is a one-time disbursement of funds using the equity in the property as collateral. All money is distributed at the end of the three-day recession period. Interest is usually a fixed rate and the loan is amortized over a fixed term.

 
 

Home Mortgage Disclosure Act (HMDA)
Intends to provide the public with loan data (race, sex, income, home location, etc.) that can be used to help determine whether financial institutions are serving the housing needs of their communities.

 
 

HTML
Made up of a wide variety of tags and attributes, HyperText Markup Language (HTML) is used to create web documents.

 
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Inquiry
Every time a lender requests a credit report, a notation is made on the consumer's record describing the lender, type of request, and date. The request is called an inquiry and is used to monitor consumer requests for credit. Different requests result in different inquiry types. Promotional or prescreen (soft) inquiries have no impact on the consumer's credit rating. Multiple permissible purpose (or hard) inquiries can have a minor impact on a consumer's credit report.

 
 

Inquiry, Zoot
Zoot processes credit requests from our clients in several formats, including our optimized Zoot Inquiry. This segmented file uses the fewest possible bytes to transfer credit data.

 
 

Inquiry, Bureau
Zoot's request to a bureau for information — a credit file — on a consumer or business. The format of this request follows a predefined standard unique to each bureau. The SPOC ® decision engine automatically generates the appropriate format for each bureau.

 
 

Instant Credit Decisioning
Credit decisioning performed in real time. Many vendors claim instant decisioning, but require a minute or more to return a response. Zoot Enterprises offers a 2-10 second turnaround for most credit decisions — including accessing the bureaus and performing calculations. Zoot's instant credit decisioning solution allows cross-sell and prescreen decisions to be completed without the consumer perceiving a delay between web pages.

 
 

Interface
Any system construction used by the KairosSM loan orgination system to communicate with other systems, either internal or external.

 
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Loan Origination System (LOS)
A software application that facilitates the process of creating new loans, from consumer application to booking onto the system of record. A standard LOS, such as Zoot's KairosSM loan origination system, includes applications pages, support for multiple channels, a workflow to process applications and apply business rules, connectivity to external data sources such as credit bureaus and valuation systems, underwriting, and booking. More complex systems can include many additional features. Similar to Application Processing System, but more specific to loan products.

 
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Matrix
A type of criteria that evaluates two or more attributes relative to each other. For example, a two-dimensional matrix relating credit score and income is often used to assign credit cards. There is no limit on the number of dimensions that can be employed.

 
 

Multi-Bureau
Three national consumer credit bureaus exist in the United States. Zoot Enterprises accesses information from consumer and business bureaus to meet two client needs. 1) If a bureau is unavailable, has no data or limited information on the individual, Zoot can automatically redirect the application inquiry to another bureau. A bureau may be selected for redirection by any objective method, including a ZIP code preference file. 2) In order to obtain the most accurate information on a consumer, some financial institutions may want to pull credit reports from various bureaus and combine the results. This is often called a multi-bureau pull. Zoot offers reports where the data is fully combined or displayed in a table for comparison.

 
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Payment Calculator
A tool used to calculate payment information for a loan. The KairosSM loan origination system includes calculators for generating various scenarios and for creating actual offers to consumers.

 
 

Permissions
Used to define user access. In the KairosSMloan origination system, permissions are based on queues, screens, risk levels, referral sources, and administrator-defined user groups.

 
 

Prescreen
A method of pre-approving a consumer for credit products based on their credit history prior to the consumer's consent. The FCRA accepts this method with some important restrictions. Consumers approved in a prescreen environment must be offered the credit for which they were screened. Zoot Enterprises offers multi-bureau prescreen in realtime and batch modes.

 
 

Prescreen of One
A prescreen credit evaluation conducted for an individual consumer. This approach is especially useful for cross-selling products during a transaction. For example, cross-selling a credit card during a DDA opening. Zoot's instant decisioning ability makes the Prescreen-of-OneSM feasible.

 
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Queue
A grouping of related tasks. Queues are the second level in the 3-tiered workflow hierarchy. Zoot's IQ Workflow manages the assignment, handling, and clearing of queues.

 
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RESPA (Real Estate Settlement Procedures Act)
Federal consumer protection legislation that affects all closed-end loan transactions. The bank is required to provide customers whose loans are being secured by a residential mortgage with various early disclosures, such as 1) Good Faith Estimates of closing costs, 2) the booklet "You Settle Costs: A Homeowner's Guide", 3) HUD-1 Settlement Statement, 4) TIL Disclosure Statement, and 5) Application Servicing Disclosure.

 
 

Risk Scoring Models
The models used to implement risk based pricing. Often in the form of a scorecard.

 
 

RFP (Right to Financial Privacy Act)
The Right to Financial Privacy Act is premised on the policy that bank customers have a right to expect a reasonable degree of privacy from federal government scrutiny. The RFPA attempts to balance the interest of the government in performing its legitimate law enforcement functions against the consumer's reasonable expectations of privacy by establishing procedures for government investigators who seek access to bank-held records about an individual.

 
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Score
A statistical rating based upon a consumer's unique credit history, used to predict future behavior based on past experience. Most Zoot clients develop their own custom scores based on prior credit experience or work for scoring specialists like Sigma Analytics. Industry standard scores, such as FICO, can also be used.

 
 

Scorecard
This term is an artifact of manual decisioning processes. It was common to evaluate a consumer's credit worthiness by entering data from the credit report onto a scorecard. After the card was completed, the scores would be totaled and used to make the lending decision. We now refer to the criteria or specifications defined by our client as the scorecard. Sets of criteria are usually combined to create a scorecard.

 
 

SPOC® Decision Engine
This is Zoot's advanced decision engine. We provide access to dozens of financial services through our ASP environment, but our clients need only one line to connect to us. This reduces the cost and difficulty of creating complex applications.

 
 

Skiptracing
Refers to the civil art of finding persons, such as lost witnesses, heirs, bank account holders, or delinquent debtors, who have "skipped" the jurisdiction or who are otherwise missing.

 
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Third–Party Credit Analysis
In many financial transactions, it is valuable to have an independent participant. This may be for legal compliance (with prescreen applications), for functionality (access to Zoot's connectivity), for performance (instant decisioning with the SPOC® decision engine), or for cost effectiveness (ASP offers current and well-maintained software at a reasonable price). The financial institution sends the request to Zoot; we pull the consumer's credit report, decision the application, and return the response to the financial institution.

 
 

Truth in Lending Act (Regulation Z)
The Truth-in-Lending Act, as implemented in Regulation Z, promotes the informed use of consumer credit by requiring a lender to clearly and conspicuously disclose to its customers, the total finance charge, annual percentage rate, repayment schedules, and other terms and fees applicable to a particular consumer credit transaction. Additional disclosures are required to be sent periodically to customers of open-end credit accounts. The Truth-in-Lending Act also contains provisions that regulate the procedures a lender uses to bill its customers. These provisions provide for a fair and timely resolution of credit billing disputes.

 
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Underwriting
The process of reviewing, analyzing, and making a decision whether to approve, disapprove, or modify an application for credit.

 
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Validation
Our web applications can accurately control the data that is accepted from the user. For example, a social security number can be checked to ensure that it is entirely numeric and that it complies with SSA guidelines (i.e. can't enter the same character in every space, can't increment each digit by one, etc.) This process of checking the data during entry reduces user errors and improves the likelihood that the application will be approved. Zoot will customize validation to meet each client's needs.

 
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Workflow
A collection of all the queues and tasks associated with loan processing. Workflows are generally based on product and include the entirety of operational functions required for application processing, from the moment the application enters the system until it is booked. Zoot has developed an innovative approach to workflow management with its IQ Workflow.


 
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XML
eXtensible Markup Language (XML) is similar to HTML. Tags are used to delineate structured information in a document, allowing complex financial information to be communicated easily in a format that most humans are able to understand.


<XML>
<Name>Bob Smith</Name>
<Phone>406-555-1212</Phone>
</XML>

 
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ZIP Code Preference File
A file the SPOC® decision engine uses to define the order in which bureaus should be accessed. Any single ZIP code or range of codes may be defined to pull one, two, or three of the bureaus in a specified order.

 

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