Transparency in Lending: 8 Ways to Build Trust With Borrowers

Borrowers have never had more options than now, from traditional banks and credit unions to algorithm-driven fintech startups. If you want to compete in this environment, the customer relationship will be key. You’re not just offering a service; you’re providing the option of dealing with an actual individual as opposed to a faceless corporation or “black-box” software. You can drive home that point by being completely transparent with your clients.

1. Educate Them About the Process

It’s a rare person who really relishes jumping head-first into a topic they know nothing about, especially when the outcome can mean getting or not getting something they badly want. That well-known combination of fear, uncertainty and doubt is the enemy of confidence and trust, and one of the biggest hurdles you’ll need to overcome.

You can help your clients become confident buyers by educating them about how the mortgage process works and setting realistic expectations about how and when — and even why — each step of the lending process takes place. Be prepared, and available, to answer your borrowers’ questions as they arise.

2. “De-jargon” Your Borrower Interviews

On a closely related note, take a serious look at — and listen to — your own explanations throughout the borrower interview. Because you deal with mortgages and lenders all day every day, you probably use industry terminology without thinking about it. It’s important to remember that what’s perfectly clear and obvious to you is much, much less so to someone from outside the industry.

Consumer-centric marketing materials are typically geared to about an eighth-grade reading level. To really build trust with your borrowers, your spoken explanation of the mortgage process and their own eligibility for loans should aim for that same degree of simplicity. Write down what you say and how you say it, and use an online readability testing tool — or the one in MS Word — to evaluate your clarity.

Remember, you’re not “dumbing it down.” You’re finding ways to take a complex topic and make it clear and understandable to outsiders. Relatively few potential clients will tell you they don’t understand what you’re saying. They’ll just find someone they do understand.

3. Focus on Knowing Your Borrower

“One size fits all” was never the smartest approach to selling, and it’s even less so in an age when borrowers are used to getting personalized recommendations from Amazon, Netflix, Yelp, Spotify and any number of other service providers. If you want to build trust in the age of granular, personalized marketing, you’ll need to make an effort to know your customers better.

The greater the depth of information you have, the more personalization you can offer consumers. That could include fine-tuning which lenders you connect them with, or connecting them with a Realtor who specializes in the kind of home they’re looking for. The important, trust-building factor is to explain how, and why, your recommendations are custom-tailored to their own circumstances. Make them feel you understand them, and their circumstances, and they’ll reward you with their trust.

4. Be Bluntly Honest

If your review of your borrowers’ credit-worthiness and overall financial situation reveals potential problem areas, be up front about this. Explain to them how and why their situation poses difficulties, and how you plan to address that when you bring their application to your lenders.

Setting honest, reasonable expectations lays a foundation for trust. If you think someone’s expectations are out of sync with their financial position, tell them so. In the “gig economy,” for example, a growing number of borrowers will be self-employed in whole or in part. Explain to them how that affects their applications and what extra documentation you might need to establish their credit-worthiness.

5. Provide Absolute Clarity About the Loan

When you’re presenting potential loans to your borrowers, be really, really transparent about the costs involved. Some forms of disclosure are required by law, but you’ll earn extra trust by going beyond what the law requires.

Provide the total cost of the loan from start to finish, breaking out every cost, charge and fee. Don’t gloss over penalties for delinquency, because hard times can strike anyone — however good a credit risk — without warning (just look at our current situation). Nobody likes surprise costs, and they can be especially galling when they occur at what’s already a stressful moment.

6. Have a Digital Presence

Younger millennials and Gen Z borrowers, and increasingly their older peers as well, live largely online lives. You’ll find it a lot harder to become a part of their “circle of trust” if you don’t have some kind of digital presence, especially for outreach.

That doesn’t mean you need to have your own app or full-blown customer relationship management software. It’s enough to understand that your clients engage with outsiders digitally, and find ways to be part of that. Texting, email and instant messaging are all appropriate ways to stay in touch during and after the borrowing process.

Maintaining a Facebook page or Instagram feed (or paying someone to do it for you) also provides a way to build trust by example. Every time you successfully secure a mortgage, post a photo of your borrowers — with their permission, of course — either signing their paperwork or holding up the keys to their new house. Personal referrals will always be the gold standard, but other peoples’ good results build trust as well, which is why positive reviews are so powerful on platforms like Yelp and Amazon.

7. Provide Meaningful Followup

“Never forget a customer, and never let a customer forget you” is a time-honored piece of advice, and it’s still a good one. If you’ve done the work of learning about your clients as individuals, maximize the return on your effort by providing personal, individualized follow-up after the loan is completed.

It’s easiest if you make a point of recording a few pertinent details during your initial contact period. This could be anything from interests they’ve expressed to the names of their kids to the details of the house they’ve purchased. Follow up periodically with emails or links to articles that touch on their interests, or give sound guidance on renovations and upgrades for the type of home they’ve purchased. As their renewal date gets closer, providing information and strategies about renewal rates and terms would be appropriate.

This requires some time, but not much expenditure in actual money. You can schedule reminders for yourself in Outlook or Google Calendar pretty easily. By the time this gets unwieldy, you’ll probably be able to justify the cost of full-blown customer relationship management (CRM) software. Plenty of options are available at very modest prices, or even free.

8. Introduce ScoreMaster

One of the most-powerful ways to build trust is through ScoreMaster. If you introduce it at first contact with a new borrower, ScoreMaster will help you build trust through transparency between you and the borrower: By letting you collaborate on a financial strategy, the dashboard makes you “teammates” in a project to get the best possible loan.

ScoreMaster helps your borrowers leverage their existing financial activity to maximize its impact on their credit score. In actual testing, users were able to build up their scores by an average of 61 points — and often more — in as little as 20 days. That’s an improvement that can open the door to a significantly better mortgage, and earn you a lot of trust.

It also reinforces many of the other trust-building steps we’ve covered, from knowing your customer to carving out a digital presence. To learn more about how ScoreMaster can help you get the most from — and for — every borrower, contact us today for a consultation.

*Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed.  

References:

1. https://contentmarketinginstitute.com/2018/10/boost-content-readability/
2. https://www.webfx.com/tools/read-able/
3. https://bluestone.com.au/about-us/
4. https://www.myabt.com/blog/what-do-modern-borrowers-expect-from-a-lender
5. https://www.prdaily.com/report-83-percent-say-word-of-mouth-influences-their-purchases/
6. https://zapier.com/blog/best-crms-for-small-business/

Categorised in: Lending Tips

This post was written by David B. Coulter