Assess your client’s credit situation ASAP and you could save yourself time and trouble, says Merri Mansfield of Princeville Credit Advocates
When a finance broker first speaks with a new client they always ask: "Do you have any adverse listings on your credit file?" It's such an important question because if there are adverse listings the broker can move to "Plan B" immediately, and save themselves and their client a lot of annoyance and time.
If you don't ask the question, or the client does not know if they have a troublesome credit score it is possible to submit an application only to receive a "no" from the lender because there is adverse on the credit file. Nearly every broker I speak with can recount an experience like this and how frustrating it was.
One rule I have encouraged aggregators and finance brokers to adopt is getting a copy of the client's credit file first, before talking about loan products, lenders or interest rates. The client's credit file can be accessed easily, within one business day from Veda for $69.95, or if you, the broker, subscribe to one of Veda's business products you can access the client's credit file for a much cheaper price, with your client's consent.
Once you have a copy of the credit file you can easily check whether the client has any adverse listings, or excessive enquires, that will seriously inhibit the loan application process. Getting a copy of the credit file will turn out to be a small investment to make an informed decision about recommending the best loan products and lenders for your client.
If there are adverse listings on your client's credit file you can consider whether to refer the client for credit repair, or massage them into a first tier loan (if the type and value of adverse allows that), or place them with a second tier lender. There are pros and cons for each option but if the choice is between referring the client for credit repair and placing them into a high interest loan I would always consider the long term financial interests of the client.
The client may want to rush into a high interest loan because they have found "the dream property" and there may be nothing you can do to stop that, but you can strongly suggest that an alternative might be clearing the adverse listings off their credit file via a reputable credit repair company. This option may save them thousands of dollars in interest rates over the life of the loan and it may also save them getting into financial difficulty down the track.
On average, to remove one adverse listing from a credit file costs a little over thousand dollars and reputable companies are highly successful at erasing these listings. If successful, the client will be able to access finance at interest rates that are two to five percent lower than if they got a loan with a second tier lender. You do the math. It's a no-brainer. Credit repair can save the client thousands.
The take home message I want to communicate is simple: I strongly recommend that you get your hands on a copy of your client's credit file to check whether there are any adverse listings before you put in a loan application. If there are difficult defaults or judgments on the credit file I recommend that you refer your client to a reputable credit repair company who can advise them.
Credit repair takes an average of four to six weeks to complete, but looking at the long term the financial effect for your client is enormous in terms of interest rate savings. Even if you do place the client with a 2nd tier lender consider recommending credit repair at the same time because if the credit file can be cleaned of adverse listings you can refinance them into a lower interest rate loan a few weeks or months down the track. Your client will turn into a raving fan and thank you for it.
