MONEY MATTERS: Your Credit Score is NOT Your Story!
Tarra Jackson ~ Credit Union of Atlanta – Author of Financial Fornication
Think back to the last time you went to a bookstore. You were surrounded by millions of books and magazines and had a desire to buy one, maybe two or three books about a general subject. You go to the Subject section and now you must choose. Hmmmm. How did you choose? Was it the cover? Was it the Title? Was it the Author? Did someone refer you to a specific book?
Generally, many book buying consumers look at the cover, then the title to determine if they are going to pick up the book and read the summary of the book on the back and/or even crack the seal to read the table of contents or a few paragraphs of the 1st chapter.
Ironically, this is how most financial institutions make their judgmental decisions when approving or declining a loan request. Right, wrong or indifferent, here is what happens when someone goes into most financial institutions to apply for a loan:
1. The representative will look at the appearance of the customer (judge the Cover of the book).
2. The representative will take the application information then pull the credit report to see the Credit Score (judge the Credit Score).
a. If the Score is attractive, they will look further into the credit report based on the loan requests (read the table of contents or begin reading the book). Then approve the loan (buy the book).
b. If the Score is not attractive, they will deny the loan request (put the book back on the shelf).
Although, not all financial institutions do this, most DO base their decision of a credit request, based on the credit score (whether or not the Person / Cover is seen).
Question: Have you ever missed an awesome read of a book that had a horrible title and crappy cover? It was only when friends, family, or Oprah said that the book was a Must Read that you decided to check it out. Have you ever missed out on an awesome relationship with someone because they did not fit your desired requirements, physically? It was only when they married someone else, then you ended up finding out that they were a millionaire and wanted to take care of you — for life. Hmmm.
I am here to tell you that MANY financial institutions are missing out on wonderful consumers who may have a very low credit score and “colorful” credit but are a less credit risk because they now have their job back or a better job and are willing to do payroll deduction to pay on their loan to reestablish their credit.
Keep in mind that there are many consumers that have low credit scores because they were negligent with their credit and intentionally had no intent to pay. These people are different and I’ll deal with them in another MONEY MATTERS article. Watch out!
Many consumers have a low credit score because of an unfortunate, unforeseen and unexpected life interruption like being laid off, furloughed, divorced, etc. Now they are getting back on their feet. They need loans too and they have a story.
For these individuals who have a willingness to pay and a desire to reestablish their credit, here are a few helpful hints when you are denied a loan due to your credit score:
1. Ask for Specific Reasons why you were denied. You will get a standard letter with 1 to 3 decline reasons. Call the financial institutions to get specifics as to why they denied your request. For example: You want an auto loan, but there is a recent Repossession on your credit report. As a lender, why should I take this risk and then you default on this auto loan? As a consumer with a story, the repossession may have been because you were laid off and you had to turn in the vehicle because you could not afford it. Now you can!!! How about THAT!
2. Request to meet with the Loan Manager (or their boss) in person. Since the Title of your book (your credit score) is crappy, you may be able to get a second look with the Cover (You). Helpful Hint: Go to the meeting in professional or clean, pressed attire. Perception is everything. Unfortunately sometimes, but true. If you go to the meeting with your pants on the ground … uh yeah. Don’t do that.
3. Ask for your Loan Request to be reconsidered. Most financial institutions have a loan appeal process. If they do not, ask for a loan manager or supervisor to review your loan request. Make sure you send this request in writing with Your Story and supporting documentation, if available and/or necessary.
4. Offer to do Payroll Deduction for your loan payments from your paycheck. If the lender knows that they are “guaranteed” to receive their payments on time, they will see the loan request as less of a credit risk and may consider it more.
5. Ask to be considered for a Counter Offer or lesser amount. The more the loan amount, the more the risk. Perhaps if you will accept $500 for 6 months instead of $1000 for 12 months, the lender may consider this counter offer.
6. If they still won’t consider your loan request, come to Credit Union of Atlanta and let’s see what we can do to assist you. Unlike most financial institutions, we understand that Credit Scores are not indicative of your actual payment history or Story on the credit report. Therefore, we pay more attention to what is in the report, rather than what the Credit Score is. Even if we cannot approve your loan request at the moment, we will tell you why and may be able to provide you with some suggestions to help make you more creditworthy in the near future.
Not everyone can be approved. BUT… if you have legitimate reasons as to why your credit is so “colorful” and you are now back on track and are looking for an opportunity to restore you credit, try these helpful hints.
P.S. When you go to Credit Union of Atlanta, make sure you stop by and say HI to me!!! 🙂
Onward & Upward!
(c) 2010 Tarra Jackson Publications