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New technology can be a double-edged sword for you as a customer.
Recently, I tried to secure lending for a business to help them over a cashflow hump as they transitioned from one season to the next. They had changed their usual practice at this time of year which caused a temporary cashflow issue, all explainable and understandable within the context of their industry. There are also plenty of willing lenders about now who will do this kind of lending. There are new companies coming into the NZ market from Australia that are keen, so I didn’t see this request as a difficult proposition. The client is an absolute straight shooter too and old school so when it came back to them that they had bad credit it was a complete surprise. They were old school, meet up with the bank manager who’s known them for years get it sorted, move on sort of thing and that is what they expected to happen now. But now they were up against something completely new to them.
A credit report is not new, but the algorithms that are now being used to analyze your financial behavior are – and they are very, very thorough.
Analytics has developed fast in recent times as a means for lenders to decide whether to lend to you. A credit report is not new, but the algorithms that are now being used to analyze your financial behavior are – and they are very, very thorough. Furthermore, they access more information faster, so they help lenders with smarter analysis, so they are trusted more. So, if they report back that you might be a bigger risk than you thought it may be a very straight, NO. If I had a dollar for every time I’ve heard “but I’m good for It” or “but I’m not a crook. I’m not going to rip anyone off!” I would lend you the money myself but that’s not the point. The quality of the analytics means if the analysis says no, lenders will trust the information it reports back over you with little room to move. It may be that you can make an application much faster online these days with a response in minutes, but technology is a two-edged sword, be wary.
The alternative of course is an Adviser who is independent. We can look at your situation before hand and stay in the fight for your sake if someone says no. We look at the person not just the data, so we are more likely to trust than an algorithm. I got the lending but really had to fight for it. But that’s what folks do for each other right? Right.