Enhance your business during a slowing marketSherene CostanzoSlowing mortgage market
The market is gradually slowing, lenders are tightening credit
and rates are on the rise. This results in less mortgage activity
and will most certainly bring more competition among lenders and
mortgage businesses. This means you will have fewer well qualified
clients. It may be time to start focusing on all possible
prospects, even those with credit scores below lender guidelines.
What can you do to bring these clients' scores up to industry
standards?
Credit education is most important when it comes to consumers
and low credit scores. The government is currently taking action to
educate consumers on credit reports and scores, as well as bring
awareness to consumers, regarding their credit reporting rights. A
recent survey by the Government Accountability Office, using a
sample of 1,578 consumers, displayed that many consumers understand
some of the basics about credit, but do not understand the
complexity of credit scores and reports or, even more importantly,
their rights. The survey also found that many consumers knew what a
credit score was, with about one-third knowing their actual credit
scores, but did not understand how certain credit behaviors affect
their credit histories and scores. The Financial Literacy and
Education Commission is active in educating consumers. You or your
clients may visit their Web site at www.mymoney.gov for more
important information about credit education for consumers.
Keep in mind that you can use credit improvement methods as a
loss leader to turn bad credit prospects into future clients. When
the mortgage market was booming, well qualified clients were
abundant. Now, amongst a slower market, there are fewer prospects,
so hanging onto all of them is extremely important to your success.
With the mortgage business slowing, finding a niche to make you or
your company stand out from the others is more important than
ever!
Don't let possible clients turn around and walk out the door
because they have bad credit. Review their reports and explain why
their scores are low. Give them alternatives and steps to improve
their scores quickly. Be sure to follow up, so you are sure to keep
them as clients.
Using credit improvement as an incentive can help draw clients
to your office. Offer them free credit evaluations when they apply
for a loan. Maybe you can give them free credit restoration with
all mortgage closings. Give credit restoration as a gift to past
clients and offer to refinance them once their credit scores have
improved. These incentives are great tools to reinvigorate your
customer base.
Express the importance of credit education to your client. The
first step for your client is to understand what his credit score
is and why. Many consumers have low credit scores, because they
lack knowledge about credit reports and scores. The government is
currently taking steps to improve consumers' understanding of their
credit rights and remedies, as well as provide education to
consumers of how credit behaviors affect credit history. Consumers
are entitled to one free credit report from all three major credit
bureaus at least once a year. This free report, however, does not
include the consumer's credit score. All three credit bureaus offer
this score for a few dollars. Anything below 700 could use a boost.
There are several Web sites promoted by the government to aid
consumers with credit education. Doing the following may help your
clients get a quick score boost:
Refer your clients to a reputable credit restoration company.
You may choose to provide them some information on your own or you
may want to refer your clients to a credit restoration company.
Credit restoration companies can help them improve their credit
scores and educate them about credit improvement and maintenance.
Many of these companies can provide this service to them at an
extremely low cost and can save them the time and aggravation of
trying to improve their credit scores on their own. This service is
extremely valuable, since it can save your clients thousands of
dollars in interest over time. It will be their best investment
ever. In turn, you will be able to finance them, once their scores
have improved. That is better than turning them away! Maybe you
will gain a few extra loans just by referring them to a reputable
credit restoration company and leading them toward improving their
credit scores. Of course, it is important for you to stay in
contact with the credit restoration company. You should choose a
company that will notify you that your clients have completed the
process, in order to be sure to have them return to you for their
mortgages.
Sherene Costanzo is vice president of Credit Consultants
Inc. She may be reached at (888) 522-7007 or e-mail
[email protected].
