Let’s work together on credit checks
Gemma Harle is managing director of TenetLime
Is it time for a common approach on credit checks?
At the moment, the three main exponents – Call Credit, Equifax and Experian – all use different criteria to produce their reports and they are not guaranteed to hold the same information.
As a result, a perfectly good application endorsed by one, can potentially be declined by a lender using another.
Uniformity is urgently needed, together with much greater transparency, so that brokers can make sure that cases are submitted with the correct information.
As things stand right now, the disparity is just another, unnecessary problem that brokers have to contend with: creating work, slowing the process and sometimes resulting in adverse recordings of undisclosed credit.
Brokers and lenders need to be singing from one hymn sheet and have access to matching information. Such alignment will enable brokers to validate everything clients tell them and lenders to avoid wasting time on applications that will ultimately be declared unsuccessful.
That way, common rogue items such as credit cards no longer used but not cancelled, or innocent overhangs on mobile phone direct debit agreements, will be visible on all platforms from the outset. Such things need to be considered by the advisor before an applications is submitted to a lender, thereby ensuring they meet the necessary criteria.
And if the big three financial information monitors cannot, or do not wish to synchronise their checking systems, lenders could resolve the issue by confirming which one they use.
Alternatively, brokers could be granted access to run credit reports on behalf of their clients, giving them the facility to assess suitability prior to an application being submitted. Relying solely on clients to provide the necessary information for a fact-find is not sufficient any more, as many will be unable to remember their full credit history.
Good brokers will insist on seeing a credit report as part of their mortgage process. But that is not always the case and the situation as it stands poses a constant threat to a broker’s relationship with both client and lender.