The credit report has long been a staple of the mortgage broking process. Not only does it ensure accuracy of data vital to a mortgage application, such as credit balances, it also helps the broker to assess which lender may be best suited for their client based on their financial circumstances.

But are we starting to see a technology-driven market shift that could mean the days of requesting a physical copy of a client’s credit report are numbered, and its purpose and application changing?

While credit data remains vital to the application process, when assessing a client’s eligibility against different lender criteria the credit report is ultimately a means to an end. What an intermediary and their client most want to know is which lenders’ criteria they meet. The data itself, in isolation, is not important for this purpose.

Manually matching credit report information based on a broker’s knowledge of lender criteria does come with an element of risk. It’s not an exact science, and it is inevitable that, where criteria are not 100 per cent transparent, preconceptions about certain lenders’ credit risk appetites may cause perfectly viable lenders to not be considered, or at the other end of the spectrum a customer to be declined at decision-in-principle stage.

Disconnected processes

While visibility of the credit report may give assurance that customers do not have any significant red flags in their credit history, lender credit scoring processes consider many variables and are rarely publicly divulged in full. This disconnect means there is a significant number of instances (up to 15 per cent) where Dips are declined despite the client being identified as a prime candidate for the lender based on first viewing of their credit report – obviously a frustrating experience for both broker and customer because they are forced to repeat the lender selection process.

Matching a credit report to a lender’s criteria is often time consuming – time that could be better spent giving the customer the advice they need.

Eligibility solutions, such as the one developed by Experian’s HD Decisions business, are able to run a lender’s full credit criteria (including credit scoring and affordability) against a client’s bureau file in real time, negating the need for a credit report or criteria check against the lenders that are covered and potentially saving hours of time and potential frustration. Not only that but the dawning age of consumer-consented data is driving the development of solutions that allow an accurate picture of a client’s circumstances to be drawn up very early in the mortgage process.

These bring together Open Banking, credit bureau and ID data (among others) to start to negate the need for analogue processes such as bank statement and payslip submissions, and the aforementioned manual credit report procurement and review.

One such example of a solution that already delivers this to the market is the Affordability Passport, developed by Castlight, which through consumer-consented data places categorised bank transactions and summarised credit data at the broker’s fingertips. It can also be deployed pre-fact-find to remove reliance on the client providing the information themselves, which can take a significant amount of time.

Brokers who embrace this sort of digital technology will be well placed to enjoy a competitive advantage in 2020, from both an efficiency and a client satisfaction perspective.

Tom Newcombe, head of digital mortgages, Experian