Dr Merrilyn Mansfield
If you want to provide the best service to your financially challenged clients, it’s important you understand credit repair so you can steer them in the right direction.
Credit repair is often portrayed as a dark art, but the concept is actually simple: once you learn the mass of relevant industry regulations, you discover the different buttons you need to push in different situations. So credit repair is actually a science, rather than an art.
That doesn’t mean brokers should bother learning the intricacies of credit repair – your time would be much more profitably spent winning and servicing clients. But if you understand the basics of credit repair, you’ll become a more skilful broker.
Here are five credit repair secrets that will allow you to have better conversations with clients whose credit histories are holding them back.
1. Only incorrect listings can be removed
There are two reasons your clients may have damaging listings on their credit file – they were either correctly placed or incorrectly placed.
Unfortunately, credit providers won’t remove accurate information from a credit file. But they will remove inaccurate information, provided you know how to work with them.
Takeaway: set realistic expectations for your clients.
2. Credit repair can’t be done overnight
Removing incorrect listings is a process that takes weeks, not days.
While a good credit repair agency will move fast, they have to liaise with credit providers – and those providers can be big, bureaucratic organisations that operate at a slower pace.
Takeaway: give conservative timelines to your clients.
3. Creditors are willing to negotiate
Credit providers often take a pragmatic attitude to debts, so they might be willing to offer your clients friendlier payment terms, or even cancel some of their debt.
This sort of informal negotiation spares the credit providers the hassle of chasing someone for money.
Takeaway: reassure your clients that all hope is not lost.
4. Part 9 Debt Agreements aren’t panaceas
Part 9 Debt Agreements are a formal renegotiation. Again, they usually involve credit providers accepting less money under a new repayment schedule.
This time, though, your clients’ name will be entered on the National Personal Insolvency Index and the agreement will be recorded on their credit file, severely damaging their borrowing prospects for at least five years.
Takeaway: notify your clients about the downsides of Part 9 Debt Agreements.
5. Consumers can solve problems themselves
Your clients might not realise they can do their own credit repair without engaging an agency.
True, they might find it complicated, stressful and time-consuming. But it won’t cost them a cent.
Takeaway: tell your clients about the self-service option.
Dr Merrilyn Mansfield is the lead adjudicator and researcher for Princeville Credit Advocates. She is fascinated with the consumer laws that relate to credit reporting and in advocating for a consumer’s right to a correct credit report.