By Lisa Hochgraf
Brett Christensen describes the difference between a co-signor and a co-applicant.It's never enjoyable being the bearer of bad news. Nevertheless, Brett Christensen suggests that being direct and positive can make communicating a loan denial a little easier. Christensen, owner of CU Lending Advice, is leading CUES School of Consumer Lending near Chicago this week. During the session, he offered these five tips for talking with members when the news about their loan application is not what they were hoping:
- Tell members the truth. Christensen suggested saying something like: "Because of X, we can't provide the increase in limit. I'm so sorry." He said that if lending staffers tell members about their exact issues, members are less likely to push back about the decision. "I think they can handle the truth and they appreciate the truth," he explained. "It's a lot better than beating around the bush."
- Don't blame your loan policy. Christensen reminded attendees about how much they all hate it when staff at a stereotypical department of motor vehicles uses the "p" word to explain why they can't help you. "Members hate the 'p' word," he noted.
- Don't blame a nameless manager, underwriter or committee. If you put it off on somebody else, members just want to talk to that somebody else. "When it comes time to turn somebody down, there's only one pronoun you should ever use: it's we," Christensen emphasized. "I'm sorry, we are unable to help you today because ... . Own it."
- Don't use lending terms that members don't understand. "Not everbody was born knowing what a debt ratio is. Instead say things like, "What we do is add up your loan payments and compare it to your monthly income." Don't talk about "loan to value," he added. Instead you can say something like: "Mary, you're asking us to refinance your car from the bank, but the value of your car today is $10,000 and the payoff is $15,200, so we just can't do it."
- Begin and end with a positive statement. Start with a simple compliment recognizing something you like about the member and make sure the conversation concludes with positive statements, possibly tips on how to improve their chances of getting the loan the next time. "It's easy to turn these members down," Christensen said. "Who's helping them get approved next time?" And thank them for the application, he added. "They have a lot of options; you have to thank them for their application."
Lisa Hochgraf is a CUES editor.
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