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Working those leads? Give them a credit lesson first

Lead nurturing likely takes up a considerable amount of your time as an agent. After all, repeat buyers and referrals only come so often. 

Aly J. Yale,
Guest Author

But what if you could make that time spent more worthwhile? More valuable? Educating your leads on credit scoring might do just that.

Consider this: Only 37% of Americans know how credit scores are determined. And what’s worse: Nearly 40% don’t know what credit score they currently hold.

Considering the massive role that credit scores play in the home buying process — and consumers’ ability to afford a home in the first place — this represents a pretty big blind spot that agents can help fill in.

The case for a quick credit lesson

Helping leads understand credit scoring and, more importantly, how to improve their own scores can be advantageous to both buyers and the agents who serve them.

For buyers, it means lower interest rates, more favorable loan terms and likely a larger home buying budget thanks to that lower rate. And a bigger home buying budget? That means more in potential commissions for the lucky agent.

It also probably means a smoother mortgage process and less chance that the buyer’s financing (and the whole deal) falls through.

Getting started

Now, you don’t need to go deep into the inner workings of the credit scoring world to make an impact.

Instead, focus on lesser-known hacks your leads can use to increase their credit score quickly and without forfeiting a lot of cash. This is especially important if they’re looking to buy a home soon and may need those cash reserves for a down payment or closing costs. 

To start, encourage leads to take steps like:

  • Asking for a credit line increase. Sometimes all it takes is a quick online request or a call to their bank, and their credit line can jump considerably. This lowers their credit utilization rate, which makes up 30% of a person’s score.
  • Becoming an authorized user on someone else’s account. Having a high-credit parent, sibling, or partner add your lead to their account can do wonders. It’s basically good credit by association. 
  • Reporting their rent to credit bureaus. Sometimes, it’s not a problem of bad credit, but rather no credit at all — especially with younger, first-time buyers. Recommend your still-renting buyers use a tool like Rent Reporters or Rental Kharma to ensure sure their on-time rent payments start helping them build credit.
  • Get any recent late payments removed. Most credit card companies and lenders won’t report a late payment for at least 30 days. Encourage your leads to settle up on any recent late payments, call up their lenders, and explain the situation. There’s a chance it could keep the derogatory mark off their record.
  • Pull their credit report and check for errors. According to the Federal Trade Commission, about 25% of Americans have errors on their credit reports. Reporting and resolving these can help improve one’s score in just a month or two (sometimes by as much as 100 points).

These are all quick and easy options that require little to no extra money (and not much effort, either). Of course, if your leads want to improve their credit scores significantly, they should also work on paying down their debts and avoiding late payments. 

But even a slight uptick in score can help their mortgage prospects considerably. In fact, according to an analysis from loan marketplace LendingTree, bumping one’s score from the 640-679 range to between 680 and 719 could shave 0.54% off their interest rate and about $30,000 in lifetime interest paid. 

Better Credit, Better Buyers

The bottom line? If you want stronger buyers and more in potential commissions, start from the ground up. Help your leads boost their credit scores and build a strong financial foundation—before beginning that home search.

The post Working those leads? Give them a credit lesson first appeared first on HousingWire.

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