No one likes to talk about how they wound up with a poor credit rating, but brokers need to break through the silence and get the full story, so that lenders aren’t left in the dark.
“Brokers need to understand the story behind bruised credit,” says Gleb Ioussoufovitch, director of sales and marketing with XCEED Mortgage Corporation. “Most of the time it is a result of an unfortunate life event, however sometimes people just get carried away by excessive spending. In either scenario alt lending can be a solution and a shortest way to repair and/or rebuild bruised credit, brokers just need to know the details of the situation and clearly convey them to lenders in the deal notes.”
Understanding how a client’s credit became bruised is the first step to bringing them back on the road to recovery – and taking them into the prime space, says Ioussoufovitch.
“It is critically important,” he says, “as alt lending is essentially a ladder which will bring such clients’ credit back up to prime lending space.”
Bruised credit is a growth market for brokers, especially in the last five years, says Ioussoufovitch, with more providers entering the alt lending space.
With more competition in the space, it is more important than ever before for both brokers and lenders to up their game, and provide financial planning solutions for clients, to lead them to the promised land of prime lending.
“Financial planning is the cornerstone of such solutions – there should be a clear plan to repair bruised credit within a specific time frame with the ultimate goal to move such clients back into prime rate environment,” says Ioussoufovitch. “Solutions can differ by term – most gravitate towards shorter terms of one and two years, features, pricing, etc. – but in any case the clean and healthy credit profile of the borrower is the ultimate destination.”
Usually the loans are designed for debt consolidation within the alt space, and should be followed up with broker advice that instills disciplined credit usage after such consolidation.
“This tactic repairs credit relatively fast,” he says, “and in one to two years, clients have their credit ‘healed’ and back into prime.”