Brokers who use credit reports could earn up to $18,000 more a year, according to Veda Advantage.
A new study by the data and analytics company found mortgages brokers are 5.4 times more likely to detect adverse credit information on consumer credit reports than other financial lenders.
On average, credit reports submitted to financial lenders had a 4.3 per cent chance of containing adverse information. However the likelihood of finding adverse information increased to 22.8 per cent in credit files submitted to mortgage brokers, indicating the time-saving benefit to mortgage brokers who pre-screen potential clients.
When testing the outcomes of the study against a broker that writes 30 loans per annum, Veda found that those who use credit reports could save enough time in prequalifying individuals to write an additional seven loans a year – equating to an extra $18,000.
The finding comes as Australian mortgage brokers, credit providers and finance companies are required to comply with the National Consumer Credit Protection (NCCP) Act from 1 January 2011 which demands a different financial assessment of mortgage applicants.
Veda Advantage head of consumer risk Angus Luffman said using credit reports would not only boost a broker’s hip pocket, but it would also save them time and improve their conversion rates.
“Poor credit history is a major cause for mortgage application rejection and an applicant’s adverse credit history is a strong predictor of future payment behaviour. Ordering a credit report early in the loans process allows brokers to focus on high quality business rather than wasting time on loans that may not progress,” he said.
“Brokers and aggregators are coming under increasing pressure from lenders to tighten prequalification procedures. Making sure applicants’ credit application details are correct and up-to-date prior to contacting lenders will help brokers lift conversion rates.”
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