When a broker applies for a rate promoted by a high street lender, they could be offered something more expensive.
This is usually the case when a client doesn’t meet the required credit score for a cheaper product, and is generally an accepted part of the mainstream market.
But it’s not just the mainstream market that sees credit score driven pricing.
A number of specialist lenders now use a credit score, or other types of behavioural scoring to determine the rate that will be offered to the client.
So you could recommend one product to your client based on the lender’s published criteria, and be offered another, more expensive rate.
How does cascading damage your credibility to your clients?
Being offered a more expensive rate than expected is arguably better than a straight decline, but if you can’t explain why, it can put you in an awkward position and potentially damage your credibility with your client.
Even after you’re offered a rate or product that you didn’t choose, do you make the choice for your client and go back to re-broke the case, or do you settle with the option that has been presented to you?
By the time an application reaches a specialist lender, it has possibly already been attempted with at least one other mainstream lender. If the client is making a purchase or has a deadline to remortgage, you could be working within a time-pressured environment. Any offer can seem like a good result, albeit a more expensive offer that you can’t really explain.
Where does it go wrong?
Of course, there can be times where your client has provided you with inaccurate information about their credit history and a search reveals that they have more adverse credit in the background than you had initially thought.
The three most common reasons for a case being cascaded to a more expensive product tier include missed payments on unsecured credit, defaults and CCJs that are left unsatisfied, and the value of defaults and CCJs.
A lower score could occur if your client has:
- Access to too much credit or not having taken enough credit in the past to establish a robust history
- A higher debt to income ratio than expected
- Issues with linked addresses, or frequent change of address
- Previously taken a payday loan, often as a result of being incorrectly advised that this would help to build their credit score
- Been the victim of fraud
- Been in their current role for a short period of time or has had too many jobs
- Mis-keyed information within the application. Date of birth is a frequent source of this problem.
Why risk cascading when you can have certainty instead?
At Pepper Money, we don’t use a credit score so we don’t need to cascade.
So as long as we get accurate information with your application, your client gets exactly the rate and product they were expecting.
We believe that this is a key difference that can help to maintain your credibility with your clients.