What Do You Do If Your Client Has Poor Credit?
Various life circumstances can lead to someone developing poor credit. Many people are still recovering from the great financial recession and their credit reports still aren’t strong. It is inevitable that you will cross paths with a client whose credit isn’t ideal. However, this does not mean that you can’t help them in finding a home or that they won’t be approved for a mortgage. Here is what you should do if your client has poor credit.
Get a Copy of Their Credit Report
If your client is telling you that they have bad credit, get a copy of their credit report to get an accurate look at what is going on. Anyone can get a free credit report at annualcreditreport.com. Look over the credit report with your client to see where their credit report is struggling and to verify that their credit really is weak. Some potential clients may not understand how credit works, and may feel that a decent credit score isn’t good enough to qualify for a loan.
Find Out Why Their Credit Is Poor
It is hard to advise your client on what the next steps are if you don’t know why their credit is bad. If your client has a recent bankruptcy or foreclosure, the only way for them to get ready to be qualified for a mortgage is to wait and let their credit recover. Most lenders have a minimum amount of time to pass since these events. If your client has recent delinquencies or a high amount of revolving debt you can counsel them on paying on time and reducing their overall debt balances. Find out what is driving down their score and advise them accordingly.
Speak With Your Mortgage Contacts
There are many mortgage products available to borrowers that have less than ideal credit. Depending on your client’s situation they may still be available to find a mortgage that is affordable and competitive. Speak to your mortgage professional contact and see if they have any options for your client. You may still be able to find them both a mortgage and a home to call their own.
Refer Them to a Credit Repair Specialist
There are many different credit repair specialists that you can refer your clients to. Getting them in touch with a professional that will help them improve their credit may expedite the process of being ready to purchase a home. However, stay away from credit programs that force your clients to default on their trade lines forcing their credit score to drop even lower.
Meeting clients with less than great credit is inevitable. However, it doesn’t have to mean you can’t work with this client. Find a Classroom Near You to learn how to best meet your client’s needs and meet other real estate professionals with experience in dealing with clients with poor credit.