Two Key Categories of Client Profiles.

You might belong to one of the two categories of client profile. The first category is the hesitant and shy away from making contact with his banker, being embarrassed of his bad financial situation. Or rather, he does not even have any idea where he actually stands financially and too shy to ask, hence leaving it be. The second category of profile fits that of a proactive and financially concerned client who seeks and acts upon the advice of his banker, whom he also considers his friend.

If you belong to the second profile, you are indeed blessed. Lenders and bankers love to build relationships, be it as an investment to foster future earnings from your investments or from other credit lines. Bankers traditionally thrive on relationship building, an arena which they are comfortable in, to grow your accounts as they age over time. And if you should run into temporary financial problems, they will willingly provide you alternatives.

Unfortunately however, should you belong to the first profile, you probably need to mend a lot of relationships with a lot of lenders. With lack of communication with your banker or lender, when you run into temporary financial problems, and do not surface the financial issue to your bankers, they will not know the reason of your payment defaults and hence your monthly default will continue to compound over time in a spiral manner, hence eventually cascading into a low credit score in your credit report.

Even Lenders Need Assurance From Borrowers.

Understand that the lenders are not at fault here. By virtue of the fact that lenders take great financial risk to approve a loan to any client, they are inclined to adopt a conservative approach when evaluating you as a credit risk. Keeping the lines of communication open as soon as a problem surface helps reassure your lenders and also allows your creditors see that you are responsible with their money.

It is always a smart move to update your bankers when financial problems start to develop. This allows you to be seen as keeping tabs on your own financial situation and better still that you are proactively requesting to work out an alternative payment schedule. In so doing, you are portraying proactive money and credit management skills which most bankers and lenders appreciate.

This also gives the lender the assurance that you will honor your financial obligations by your very own pro activity. The best part of this is that you will not be negatively rated in your credit score in light of the new repayment schedule instated.

If you belong to the first category of client profile, we highly recommend that you review your communications with your bankers and lenders, and start conversing with them more proactively. Building good relationship with your bankers and lenders when you do not have any financial problems is much easier, and this could pave the path for that rainy day when you just might need financial salvation from your bankers.