"Personal finances are a sensitive subject, particularly after a period of so much financial upheaval, so it's essential to practise empathy and understanding"
No one can deny the uncertainty we’ve all faced over the past 18 months. With business closures, employees furloughed on reduced income and the economy still in flux, it's vital that we understand the financial challenges our clients are facing when it comes to getting a mortgage. In fact, with research revealing that more than half of UK adults started 2021 in debt, the chances of a client coming to you with a poor credit score is high.
We generate between 75 and 100 leads a day in our business, and around 60% of those new enquiries have some form of adverse credit. Often, we find that it's not due to persistent bad financial habits, but more often than not it’s a one-off event, like a bank account switch that results in a direct debit payment being missed. I’ve lost count of the number of times a client is shocked to have a mortgage application refused on the grounds of adverse credit. However, seeing as it’s not widespread knowledge that simply forgetting to update your address with a company when moving house, or innocently forgetting to settle something like a parking fine can become a county court judgement without people being notified, is it really surprising?
Brokers are more important than ever in supporting clients with poor credit scores. Not only can we help clients understand their credit report, but we are best placed to advise them on the most impactful changes they can make to begin rebuilding their scores. It’s a common misconception that if you have poor credit, you won't be able to get a mortgage. It’s our job to challenge this misinformation and reassure clients that all is not lost because they have adverse credit. Personal finances are a sensitive subject, particularly after a period of so much financial upheaval, so it's essential to practise empathy and understanding when discussing the options available to your clients.
At The Mortgage Hut, the first thing we advise our clients to do is get hold of a copy of their full credit report, so they can see exactly where the issues are. Then, we go through the report with them, making sure they understand what it means, and giving them plenty of opportunities to ask any questions they may have. We also let them know their current mortgage options and how these could change in the next three months, six months and a year from now.
We strive to empower our clients with the knowledge and understanding to make positive changes to their credit score. Whether that's informing them on how to contact lenders to rectify mistakes, highlighting a link on their file to someone with a poor credit score so they can get it removed, or simply showing them the benefits of making those payments on time, we want each interaction to be a positive one.
We must remember that not everyone works in financial services and, for some clients, the world of mortgages and banking can seem confusing and even scary. By taking the time to properly listen to our clients' concerns, and thoroughly explain their options, we can reassure them that there absolutely is hope for them to get a mortgage, even if they have bad credit, and debunk that myth once and for all.