Mortgage brokers credit check applicants at record rates
72% rise in credit checks by brokers in past 3 years
Sydney, Australia – Tuesday, 2 August 2016: Mortgage brokers are gaining measurable benefits from using credit reports as part of their applicant processing, new research shows.
In the past three years, the number of credit checks executed by brokers has increased by 72%, according to Veda, a leading provider of credit information and analysis in Australia and New Zealand and a wholly owned subsidiary of Equifax.
Angus Luffman, Veda’s General Manager of Consumer Risk, said brokers were increasingly credit checking applicants because the benefits far outweigh the costs.
“Veda modelling has shown that credit reports enable brokers to lift their completion rates, allowing them to close more deals and positively impact their bottom line,” Mr Luffman said.
“The return when a broker incorporates credit checking into their process was recently assessed to be 52 times the initial investment. This return on investment includes both revenue from increased conversion rates and cost savings from lower processing times.[i]
“The benefits from credit checking extend beyond return on investment – the end customer ultimately wins from a better customer experience,” he added.
Credit reports allow brokers to match an applicant to the optimal lender based on externally verified credit credentials. This means the broker can direct applicants to lenders that are more likely to approve that applicant – or understand they are likely to be declined early on.
Mr Luffman said more broker organisations were introducing credit checks as part of their compliance program, as well as streamlining their use of external data sources. This allows them to build a more complete picture of a consumer’s financial circumstance, assist in matching customers to best fit lenders and reduce application processing times.
“Mortgage brokers will be one of the first groups to benefit from the additional insights that Comprehensive Credit Reporting (CCR) data contributes to credit reports. These additional insights will not only help secure the appropriate deal but also ensure responsible lending obligations are met,” he said.
In March, Veda announced it had partnered with Australia’s largest provider of mortgage broking services, Australian Finance Group (AFG), to make it easier for mortgage brokers to perform credit checks and better match potential borrowers with appropriate products via integration with AFG’s technology platform FLEX.
Veda has also integrated their credit reports into a number of loan management platforms including SymmetryCRM® and secured agreements with a range of aggregators focused on making it easy and cost effective for brokers to access credit reports.
“The combination of conversion rate benefits and better customer experience means there is no doubt that credit checking is best practice and will increasingly become the norm,” Mr Luffman said.
[i] Research conducted by Veda comparing 60 loan applications valued at $445,000 each with average commission rates. The conversions rates and processing times were provided by a broker who does not perform credit checks and a broker who uses Veda credit reports.
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