Five things to watch out for with credit reporting

There’s a thin line between good clients and bad clients – make sure yours is on the right side

There’s a thin line between good clients and bad clients – make sure yours is on the right side

Credit reporting is something you, and your client, literally can’t afford to get wrong. That’s because every forgotten credit payday loan, every wrongly-entered date of birth and every re-application makes the next application more likely to be declined. MPA has listed some details you dare not overlook:

1. Adverse listings

These refer to defaults, court actions and bankruptcies, the ‘black marks’ on any credit report. Even if they are paid they remain on a credit report for four to seven years. Whilst there are avenues for challenging these marks, bear in the mind this process can take several months, which may be impractical if they are looking to buy immediately.

2. Enquiries

Too many credit applications can lead to a dreaded ‘busy’ credit report, which can be detrimental. Indeed Murray Cowan of lender Better Mortgage Management warns that hits and misses aren’t good – borrowers and their brokers need to pick lenders and stick with them. It’s also worth looking into past declines to see why your client was rejected.

3. Client’s details

Check, check and check again – even an outdated driver’s license number could cause your application to be rejected. This is a particular problem with borrowers who’ve had multiple addresses in a short time; you can’t stop lenders being suspicious, but you can make sure that the client’s current details are absolutely correct.

4. Payday lenders

Dealings with payday lenders are not generally beneficial for credit reports, as they suggest the borrower has trouble meeting financial commitments. However there are ways to remove enquiry records through credit repairers.

5.  Directorships and commercial information

If your client is director of a company, then they could be declined not because of their own report but because of their company’s credit report. It’s generally advisable to delve a little deeper into all commercial information – if a  client lists their occupation as ‘painter’ but earns $200,000 it’s possible his actual job is running a painting company, an important distinction.

This article was adapted from a column by Richard Symes of Credit Repair Australia – read the full version in MPA 13.4