January 23, 2008, 7:00 am

Your wife may forgive you, the bank will not.

by: The Financial Blogger    Category: Banks and You,Credit Rating & Credit Bureau
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I recently had to work with the following situation. I received a file for a credit product as usual. When I started working on it, the very first thing I looked at was the client’s credit bureau. It was simply awful. This guy had 5 or 6 credit accounts that were late last year. Most of his late payments happened during the same period. He went on the verge of being sent to collection agencies on many of them. Let just say that things were not as bright as the sun in Jamaica!



So I stop looking at the file right away; there is no way for me to do anything for this guy anyway. The credit department would just laugh at me if I wanted to submit this file. Sometimes, you know that the patient is already dead before you try to save him.

So I when I am about to decline the file, I give a call to the guy and explain him why. Then the story starts:

“Well, you know, I went through a hard time. There was that period of my life where I was completely lost and I totally forget about my credit cards. Things went so bad with my wife that I had to leave the house for a few weeks. Then I used my credit cards to pay for my expenses and I could not keep up forever.

However, now things have settled down. In fact, I’m back with my wife and we solved our problem. My bills are now up to date and I even made a lump sum payment on my mortgage at the end of the year. I’m telling you, I’m back in business.”

I listened carefully to his story as he sounded genuine. Unfortunately, his late payments kicked down his Beacon Score pretty hard. In fact, this was the type of file that is being declined by our banking system without going to a credit analyst. I felt bad as I could not do much for him at that time.

This is at this point that I thought about a solution. In fact, chances were that her wife has an impeccable credit. Therefore, I asked him to apply with his wife as main applicant so we have better chance to get his request approved. He agreed and was quite happy to have an alternative.

Since I did not see his wife’s profile yet, I can’t say if they will be approved or not. However, there is one thing I know; if his wife may forgive him, the bank is impetuous when it comes down to late payments. In fact, this dark period of his existence might have length only 3 months but it will show on his credit bureau for the next ten years. Unfortunately, banks will remain reluctant to grant credit this individual until these issues are washed away.

Therefore, always make sure that you make the minimum payments on all your credit cards, even when you go through rough times!

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“Well, you know, I went through a hard time. There was that period of my life where I was completely lost and I totally forget about my credit cards. Things went so bad with my wife that I had to leave the house for a few weeks. Then I used my credit cards to pay for my expenses and I could not keep up forever.

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