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Following years of frustration and uncertainty, borrowers will now receive credit scores from lenders - including reasons why they have been rejected for a home loan.
Graham Doessel, chief executive officer of MyCRA Credit Rating Repair has applauded the recent decision by Veda Advantage to offer Australian consumers their credit scores, previously reserved for lenders.
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Mr Doessel said brokers should use the score to select the appropriate loan and lender for their clients, cutting back on rejected loan applications.
"Being able to see the credit score would be invaluable to brokers," he told The Adviser. "It will make their job much easier, because they can have an idea very quickly how the client is going to fare with particular lenders."
Mario Rehayem, director, sales and distribution, at Pepper told The Adviser the credit score information will assist brokers to improve their application efficiency.
“At the moment, brokers are guessing why a person was refused on a loan,” he said.
“A lot of the time, people have a blank expression on their face when it comes to credit scoring,” added Mr Rehayem.
Ian Simpson, from Smartline Personal Mortgage Advisers, said brokers should use the additional information to better service their clients.
“The more information that we have about the credit history of a client, the better we can serve that client,” he said.
Mr Simpson said brokers can use the information to secure a loan for clients who may have had an issue in the past.
“It’s prudent in that case to run a credit check so that you know exactly what you are dealing with and you make the right decision upfront, rather than sending the application in to a lender who you know won’t approve it based on what the person's credit history is,” he said.
Alex Shumsky from Loan Market Oakleigh said credit scoring information can be valuable provided the credit scoring is in line with that of the banks.
“You can submit one loan to one bank and fail on credit scoring then submit it to another bank and it gets approved, same deal, same info but they’ll score it differently,” he said.
“If the scoring is in line with the banks then it would be great, but if this is just something that they can offer and it has not bearing or relevance to an actual application being lodged then it is just pointless,” said Mr Shumsky.
