Client’s go looking for broker support because they are looking for assistance navigating the muddy waters of the credit and finance system. They want guidance, they want the best rate and they want to work with someone they trust to get them what they want, when they want it. When they feel that their broker has ticked all the boxes, they could become your client for life.
One of these muddy waters that clients need support navigating, is the credit and finance world when their credit file is not completely clean. Having a credit file with a default, a judgement, a credit score less than 550 or many credit enquiries can change everything for someone. One of the most significant issues that they may be facing is that everyday interest rates are no longer available to them and upfront fees may escalate.
So what is a broker to do? There are many options, and all of them involve the client paying more money. Some options mean the broker could lose the client altogether. There are alternate lenders who accept these types of clients. Alternatively, the client could sit tight do nothing and come back to the broker when the default listing has run its natural course. The other option is that the client has their credit file cleaned via going through a credit repair company of their choosing or their brokers recommendation.
When the broker takes the first option, and has the client enter a higher interest rate loan, again there are options. The client could be happy with everything and stay with that lender for 12-18 months. Alternatively, the client could initially be happy and then realise that they could be getting a different rate somewhere else, and go searching for someone to find another option that will be more cost effective for them. The other option is that the client cannot keep up with the repayments, and defaults on the loan.
While the client being ecstatic is ideal, the other 2 options are equally as likely. Clients want to save money, especially if the going starts to get tough. Financial institutions, through advertising, are always looking to talk to your clients about what they could be saving, if they only switch to them. As brokers, it is important to continue to build that relationship long after the deal has been done, to stop them from going elsewhere and to protect their trail.
The second option, having the client wait until the credit file takes it’s natural course, and fixes itself, can also lead to a number of outcomes. On the one hand, it is protecting the client from paying more money to the banks in the short run. On the other hand, they may go to someone else who is prepared to help them. At the end of the day, prices of homes continue to rise and interest rates are not guaranteed to stay low. Waiting may appear to be a cost-effective solution, however, it may end up costing the client more than first thought.
The third option, and potentially the most cost effective, is to have your client embark on credit repair. In some cases, as a result of credit repair, the adverse listing will not be removed and the client will be in the same position, minus a couple of hundred dollars. In other cases, the adverse listing(s) will be removed, allowing the broker to write a loan for their client as if the adverse listing was never on the file, saving their client up to $10-20,000 per annum in interest payments.
In addition, the client, having saved thousands of dollars, may be your client for life. They may be less likely to switch lenders without your knowledge, therefore preserving your hard earned trail commission. They may be more interested in referring people to you. In addition, the next time they go for a credit card, or other type of finance that you cannot provide to them, they will not have anything standing in their way, and they will know it was because of your recommendation.
By getting your clients credit file in the green before they go for finance, everything is better for everyone involved.
Carmel Mansfield is a Business Development Manager for Princeville Credit Advocates.
Carmel has worked in both the investigation team responsible for getting default and judgment listings removed from clients credit files, as well as supporting a well-established broker network with their clients who need these listings to be removed. She has worked in the credit repair field for seven years.
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